Part -1:
1) What are price indexes designed to measure? Out-line how they are constructed. When GDP and other income figures are compared across time periods, explain why it is important to adjust for changes in the general level of prices.
2) The accompanying chart presents 2010 data from the national-income accounts of the United States.
A) Indicate the various components of GDP when it is derived by the expenditure approach.
B) Indicate the various components of GDP when it is derived by the resource cost-income approach. Calculate GDP using the resource cost-income approach.
Part -2:
1) Is the natural rate of unemployment fixed? Why or why not? How are full employment and the natural rate of unemployment related? Is the actual rate of unemployment currently greater or less than the natural rate of unemployment? Why?
2) What impact will high and variable rates of inflation have on the economy? How will they influence the risk accompanying long-term contracts and related business decisions?
3) The following Table B presents the 2010 population, employment, and unemployment data among working age person for several countries.
A) Calculate the number of people in the labor force for each country.
B) Calculate the labor force participation rate for each country, and put the figures in the blanks provided. Which country had the lowest?
C) Calculate the unemployment rate for each country, and put the figures in the blanks provided. Which country had the highest unemployment rate? Which had the lowest?