ECON 201 Section 5
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ECON 201 Section 5
Handout 13-1 (10 Points)
Thinking like an Economist
For each of the following macroeconomic questions, suggest a similar microeconomic question.
Microeconomic Questions
Example:
What factors affect hiring decisions of a typical firm?
Macroeconomic Questions
What factors affect the unemployment rate?
How does a fall in consumer spending affect the country’s output?
How does inflation affect the economy?
If the government raises taxes, how would it affect the economy?
Handout 13-2 (10 Points)
The Business Cycle
According to Keynesian economics, a depressed economy is the result of inadequate spending, and government intervention can help a depressed economy through monetary policy and fiscal policy. For each of the policy responses below, answer if the government response was helping or hurting the economy.
. In response to the Great Recession of 2008, the U.S. government cut taxes and increased spending.
. In response to the Great Recession of 2008, many European governments raised taxes and cut spending.
. When a recession hit Brazil in 2014, the government cut spending.
. When the coronavirus recession hit the United States in 2020, the U.S. government launched the $2 trillion relief package in March and the $3 trillion package in May.
Handout 13-3 (5 Points)
The Business Cycle; Inflation and Deflation
In the table below, fill out if a certain indicator increases or decreases during the business cycle.
|
|
Output |
Inflation |
Unemployment |
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Recession |
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|
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Expansion |
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|
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Handout 14-1 (10 Points)
What’s In and What’s Out?
Categorize the following items as either included in the calculation of GDP or excluded from it. Why are they included or excluded?
. Hamburger buns bought by McDonald’s Corporation for making Big Macs
. A used macroeconomics textbook
. A new pair of Levi’s jeans
. Newly purchased shares of Google stock
. A new Chrysler automobile
. A new Lexus SUV, imported from Japan
. A newly purchased $10,000 U.S. Treasury bill
. An economic course at university
. A cup of coffee purchased at Starbucks
Handout 14-2 (5 Points)
Who’s Spending?
Rank, from highest to lowest, the following types of spending included in GDP:
Government spending
Consumer spending
Business spending
Net exports
Handout 15-1 (10 Points)
Calculating Nominal and Real GDP
Use the data in the following table. Assume that this economy has only two goods produced, bread and cake, and 2004 is the base year.
2004 2005
Quantity of bread (billions) 5,000 6,000
Price of bread $2.50 $2.25
Quantity of cake (billions) 1,200 1,150
Price of cake $4.00 $3.80
Calculate the following:
1. Nominal GDP in 2004 and 2005
2. Real GDP in 2004 and 2005
3. The growth rate of real GDP in 2005
2024-01-09