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About GDP, Unemployment, Inflation and economic growth - Assignment Example

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Optimists argue that, low-income countries improve their standards of living by learning from countries that have grown quickly. Residents of a country after being pleased with another countries style of living, exercise implementation of certain economic-friendly…
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About GDP, Unemployment, Inflation and economic growth
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Sur when due: Macro Spring a. Nominal GDP=sum of the current year price*current year quantity of all the goods.
2009: (100*2) + (50*6) =200 + 300 = 500
2010: (75*5) + (65*10) =375+650=1025
b. A real GDP= total of the base year price*current year quantity of all the goods.
2009: (100*2) + (50*6) = 200+300=500
2010: (75*2) + (65*6) = 150+390=540.
c. Real GDP growth rate= (Real GDP this year- Real GDP last year)/ Real GDP last year.
(540-500)/500 = 0.08
2. GDP=C+I+G+NX.
(885+300+350+35)=1570.
3. a. Business cycle. Upward and downward fluctuations for economic growth and decline.
=2001-1985=16years
b. Peak-the economy is at its highest point.
1993.
Trough. lowest point of an economy.
=1985
expansion. Period of growing economy
c. Expansion=1993-1985=13
2001-1999=2
Recession. Period of increasing economy.
1998-1994=4years
4. Optimists argue that, low-income countries improve their standards of living by learning from countries that have grown quickly. Residents of a country after being pleased with another countries style of living, exercise implementation of certain economic-friendly practices to help improve their status.
High-income countries continue to invent new technology that low-income countries apply when already easy to comprehend. With an already built technology, coming up with innovations to improve the technology is simplified. Low-income countries therefore stand high chances of catching up economically with the high-income.
5. Unemployment rate=unemployed/labor force
Labor force= unemployed + employed= 10000+1000=11000
Unemployed=40
= (40/11000)*100
=0.3%
6.Cost in 2012=(750*0.38)+(300*0.21)+(250+0.17)+(50*0.09)+(75*0.05)+(150*0.10)=413.75
Cost in 2013=(780*0.38)+(290*0.21)+(255*0.71)+(75*0.09)+(75*0.05)+(150*0.10)=563.85
CPI =CPI = (Cost in current year/Cost of the basket in base year) × 100
CPI for 2012= (413.75/413.75)*100=100.
CPI for 2013= (563.85/413.75)*100=136.3.
Inflation rate= ((current year CPI-previous year CPI)/previous year CPI)*100
Inflation rate for 2013= ((136.3-100)/100)*100=36.3
7. Homeowners who are borrowers benefited from the inflation while banks, lenders, that lent the money suffered loss. Occasions of high inflation lead to low real interest rate resulting to lenders receiving less money, which explains the cause of loss. Borrowers on the other hand benefit in that they repay the loan using cheaper money.
Marshall, Alfred. Principles of economics. Basingstoke: Palgrave Macmillan, 2013. Print. Read More
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