1. This question is for discussion in teams.
As the semester progresses. we will discuss these issues in class.
Visit The World Factbook at https://www.cia.govlibrarypublications:The-world-factbook'. In "Please select a country to view- first select "World- and read the Introduction Think about and discuss with your team the relationship between macroeconomics and the events that marked the 20th century. Would it be fair to say that the history of the 20th century is the history of the mac¬roeconomics of the 20-' century?
Next, what is the world population? What is the world output? What fraction of the world popu-lation lives in the U.S. (go to "People and Society")? What fraction of the world output is pro¬duced in the U.S. (go to "Economy")?
Next, look at "Labor force - by occupation.- What fraction of the global labor force works in agriculture? Compare it with the fraction of world GDP that is due to agriculture (in "GDP -composition, by sector of origin").
Next, pick a country of your liking and examine its population, output, budget deficit, trade bal¬ance (the difference between exports and imports). labor force composition, unemployment rate, etc. You can compare countries by clicking on the "Field Listing- icon or. when it is displayed, by looking at the rank-order figure. Why are macroeconomists interested in a county's "Age structure" (in "People and Society")?
2. Nominal and real wages: take a look at the figures on the next page. taken from other editions of the textbook_ The figure on the left reports data on the wages of hourly paid employees in Canada, while the figure on the right reports data on the wages of production workers in the U.S.
a. Define nominal wage.
b. Define real wage.
c. Based on the tends in the figures, did the living standards of the relevant workers im-prove in the last three decades?
d. Would the discussion in Paul Krugman's Viagra article affect your answer to (c) above? If so, how?
3. Nominal and real GDP:
a. In 2003 dollars: which one-nominal or real GDP-grew faster in the U.SlCanada in the years 2003-2013? (Hint: think what happened to inflation dining these years.)
b. In 2003 prices: which one grew faster in Japan in the years 2003-2013? (To answer this question, go to Japan's Statistics Bureau's Consumer Price Index website at WWW _stat .go.tpienglishidatalcpilindex hull, click on "2015 Yearly Average Results for Japan." and look at the figure.)
c. Can nominal and real GDP move in different directions? Explain
d. Imagine an oil-producing country whose GDP consists solely of oil revenue. Imagine that 50% of its production capacity is destroyed in a military attack by a foreign amiy (the rest remains intact, and international trade is not interrupted). Imagine that as a result. global oil prices double. How would this country's nominal GDP be affected?
e. How would this country's real GDP be affected?
f Imagine a two-person economy. Person A produces tomatoes, and person B produces corn. Each person eats their own product (they never trade with each other) Think of the definition of GDP: what would nominalireal GDP in this country be?
g. What would nominal GDP in this country be if A bought from B all of 13' s corn (pro¬duced in a given year) for, say, $100, and B bought from A all of A's tomatoes (produced in the same year) for the same price? (In other words, each ate the other person's prod¬uct.)
h. What would nominal GDP in this country be if the same happened. only instead of charg¬ing each other $100 they now charged each other IS million? Would this price-change af¬fect real GDP?
4. Women and the labor force:
a. How did the trends in Figure 13.1 in the textbook affect overall labor force participation?
b. What is the relationship between Figure 13.1 and Figure 12.1? (or: Can the former ex¬plain some of the latter?)
c. How is GDP affected when one marries one's accountant/hairdresser? (Assume they keep providing their services as before. but (hopefully!) they stop charging money from their new spouse.)
Part B
Please limit your answers to eight (8) lines. Shorter answers are welcome. Answers longer than eight lines will not be read.
This part is a real-world application of growth forecasts. It might be easier to work on after Ses¬sion II. in which we will discuss economic growth and related issues. It is posted earlier for your convenience.
-Dreaming With BRICs: The Path to 2050- (downloadable from https://www.goldmansachs.conliour-thinkino.'archive/archive-pdfstrics-dream.pdf)
This paper from the Goldman Sachs Global Economics Website is a classic and defined much of the discourse in the years that followed its publication. It was a brave attempt. in .2003, to predict some of the global macroeconomic landscape 50 years into the future. It is interesting to read it now, more than thirteen years after it was authored, and think about which (if any) of the fore¬casts still seem(s) to be on track.
Read the paper's 17 pages carefully and make sure you understand the assumptions, arguments, and charts. Don't struggle with issues we haven't covered, and feel free to skip the appendices (although they include interesting forecasting methodology).
Try to focus on (and discuss with your team!) how growth theory from the textbook is applied to the real world in this paper. and how catch-up. convergence. demographics. and growth-promoting policies all come together. Please answer the following questions:
1. How can demographics explain the trends in the chart at the center-left of page 5 (titled -India Shows...-)?
What are the implications of the chart at the bottom-left of page 5 (titled -Incremental Demand...-) for firms and investors. say. in North America?
3. On page 7, the authors write -We use the ES. Census Bureau's demographic projections to forecast employment growth over the long term, assuming that the proportion of the working age population that works stays roughly stable.- Did a similar assumption hold for the C.S. (or for your country. for that matter) during the last half-century?'
4. What forms of capital do the authors see as the most important ones for ensuring the con¬ditions for economic growth in the BRIC countries?
Are you ready?