MACRO AND MICRO ECONOMICS 10% ASSIGNMENT
Individual Assignment
Due April 14, 2023
Instructions
1. Answer the questions in the space provided.
2.
The assignment must be submitted through Blackboard only
. No other submission format will be accepted.
It must be in Word or PDF format.
No photographs are accepted.
3. Late assignments will be subject to a late penalty of 20% per day including weekends. Except in exceptional cases and in accordance with George Brown College Policy as well as the course Testing and Assignment Policy, no extensions without penalty will be given after the assignment due date.
4. All calculations should be rounded off to
two decimal places.
Note: I have provided the chapters and pages (the hard copy and etext have the same page numbers) that relate to the question. Other sections of the text may also relate to the question and should be accessed, if needed to answer the question.
Student Name: ______________________________________
Student Number: ____________________________________
ALL ANSWERS MUST BE TO TWO DECIMAL PLACES OR MORE
FOR EXAMPLE, 7.65% or 7.654% or 7.6537, NOT 7.7 %
Chapter 8:
1) Identify in which component of the expenditure-based GDP these activities would be included. Choose which component: C, I, G, X, M, or choose N, if the transaction is not included in the GDP. Note that all these transactions involve solely persons and companies located in Canada, unless otherwise stated. (Chapter 8, pages 213-219) (.5 marks each)
Transaction
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Choose C, I, G, X, M or
N (for not included)
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a) A lawyer receives payment for preparing a will for a client.
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b) An owner of an Ontario Savings Bond is paid interest on the bond.
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c) A construction company buys a new truck to transport material.
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d) A student is paid for shoveling a neighbour’s sidewalk.
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e) An unemployed carpenter receives an employment insurance payment.
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f) A Canadian government department buys a computer system to track the weather.
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g) A Canadian construction company buys lumber from a supplier in Buffalo, New York, USA
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h) A person sells a used computer to their neighbour.
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i) A Canadian business sells medical equipment to a Japanese hospital.
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j) A homeowner repairs his own leaking roof.
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k) A homeowner buys building material at Home Depot.
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l) A consumer buys a new car.
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2) On January 1, 2022, Seabreeze Construction Company owned 4 dump trucks, 2 excavators and other construction machinery with a total value of $950,000. During 2022, Seabreeze Construction bought two new trucks paying a total of $120,000. On December 31, 2022, the market value of all the firm's trucks, excavators and other construction machinery was $1,020,000.
(Chapter 8, pages 215, 216) (1 mark each)
What was Seabreeze’s gross investment in 2022?
______________
What was the amount of depreciation in 2022? _______________
What was the net investment in 2022? _______________
3) In 2019, the imaginary country of Laffonia had a real GDP of $9.7 billion and a population of 310,000. In 2020, the real GDP was $10.0 billion and the population was 315,000.
What was Laffonia’s growth rate in real GDP per capita between 2019 and 2020?
(Chapter 8, page 220) (2 mark)
Chapter 9:
4) The price and quantity produced and consumed in Canada in a simple economy for 2021 and 2022 are shown below. (Chapter 9, pages 233-235)
Assume that t
he reference year is 2021 (CPI = 100) (1 mark each)
Product
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Price in 2021 ($)
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Price in 2022
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Quantity consumed in 2021
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Quantity consumed in 2022
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Hotdogs
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2.25
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2.50
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1350
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1200
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Cans of pop
(0.5 liter each)
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1.10
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1.40
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7500
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7800
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Chocolate bars
(100 grams)
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1.75
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1.75
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3300
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3300
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(Magazines)
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3.25
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4.25
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1500
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1000
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Movies
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4.50
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4.00
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1000
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1500
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Use the table above to answer the following questions. (1 mark each)
a) What is the CPI (consumer price index) in 2022?
b) What is the inflation rate between 2021 and 2022?
c) What is the nominal GDP in 2022?
d) What is the real GDP in 2022?
e) By what percentage did the economy grow (or shrink) between 2021 and 2022?
5) Calculate the inflation rate experienced in 2019 and 2020 based on the CPI for each year below:
(Chapter 9, pages 234, 235) (1 mark each)
Year
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CPI (as of December 31 of the year)
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Inflation rate (%)
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2018
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124.5
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Not applicable for 2018
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2019
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125.2
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2020
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127.5
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a) The inflation rate for the period from 2018 to 2019 was:
b) The inflation rate for the period from 2019 to 2020 was:
6) Assume the CPI was 100.0 in 2002 and 125.2 in 2014. Jan’s wage at ABC Innovation was $60,000 in 2002 and had increased to $78,000 by 2014. After adjusting for inflation, what was Jan’s “real” wage in 2014? (Chapter 9, page 235) (2 marks) _________________
7) The table below shows output and prices during 2021 in the fictional country of Laffonia that produced only two goods (basketballs and baseballs) and also the prices of these products in 2020.
(Chapter 9, pages 236, 237)
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Output in 2021 Quantity
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Per unit price ($) 2021
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Per unit price ($) 2020
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Basketballs
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40
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22.00
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16.00
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Baseballs
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10
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28.00
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25.00
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a) What is the value of the economy’s output in 2021 valued at 2021 prices? (1 mark)
b) What is the value of the economy’s output in 2021 valued in 2020 prices? (1 mark)
c) On the basis of your answers for parts a) and b), calculate the value of the GDP deflator in 2021 if 2020 is treated as the reference year. (2 marks)
8) Assume the following information for the fictional country of Laffonia for 2021.
(Chapter 9, pages 242-244)
Total Population of Laffonia
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24.5 million
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Total population 15 years and over
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20.7 million
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Total labour force population
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17.5 million
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Those 15 years and over not in the labour force population
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3.2 million
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Labour force
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?
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Part-time workers that do not wish to have full time jobs
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1.0 million
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Part-time workers that wish to have full time jobs
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0.75 million
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Workers with full-time jobs
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10.3 million
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Unemployed members of the labour force
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0.45 million
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For 1 mark each, calculate:
The number of people in the labour force _______________
The unemployment rate____________
The unemployment rate that would result if the
underemployed
are included in the calculation ___________
The labour force participation rate _____________
9) Identify which unemployment type (seasonal, structural, cyclical, frictional) best describes the situation of each of the following individuals. (Chapter 9, pages 244, 245) (1 mark each)
a) a wristwatch repairman that was laid off as most people use their cell phone to check the time and few people are buying watches worthwhile repairing. _________________ unemployment
b) a digital artist who lost her job with an advertising company during a recession in the economy. ________________ unemployment
c) a marketing manager who quit her job to look for another similar marketing job which provides a higher salary and more benefits. ___________________ unemployment
Chapter 11:
10) Suppose that the government has an outstanding debt of $10 billion at the end of 2015. Then, in year 2016 there is a deficit of $50 billion; in 2017 there is a deficit of $70 billion; in 2018 there is a surplus of $40 billion; and in year 2019 there is a deficit of $20 billion. What is the government debt at the end of 2019? Assume all surpluses are applied toward reducing the debt and all deficits add to the debt. (Chapter 11, pages 303, 304) (2 marks) _______________
11) The imaginary country of Acordia lists the following projected revenues and outlays for 2022: $30 million in personal income tax, $20 million in corporate income tax, $7 million in indirect taxes, $2 million in investment income, $35 million in transfer payments, $14 million in government expenditures, and $4 million in interest on the debt. What is the projected budget surplus (or deficit) for 2022? Calculate the amount and indicate whether it is a surplus or deficit. (Chapter 11, pages 303, 304) (2 marks)
Amount: _______________, Surplus/Deficit (indicate) _____________
12) Using the
Bank of Canada Inflation Calculator
at the site shown below, calculate what would be the price in 2023 of a house in Toronto that cost $15,000 in 1964. Assume that over those years the house increased in value each year at the rate of inflation. (1 mark each)
Note: Instructions on how to use the Inflation Calculator are provided at the site.
Value in 1964: $ 15,000
Value in 2023: $ __________________
What was the average annual rate of inflation during the period from 1964 to 2023? ____________