Macroeconomics Answers

 Calculate (1) total real GDP year-on-year growth in Q2 of 2019 (that is, the percentage change from Q2 2018 to Q2 2019) and that of Q2 2020 and (2) year-on-year real growth of non-oil private sector in Q2 2019 as well as Q2 2020. o Chart: Draw a bar chart showing the real growth rates (in (1) and (2) above). In the same chart, add the real growth rate in 2020 of the whole world, Arab World, MENA region, emerging and developing Economies, advanced Economies. Real growth rates of those regions are calculated by IMF

https://www.stats.gov.sa/en/814

https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD

Assume the economy in the United States has the following data:

• Consumption = $12 trillion
• Defense spending = $3 trillion
• Government Purchases = $5 trillion
• Net Exports = -$100 billion
• Imports = $500 billion
• Investment Spending = $2 trillion
• Social Security Payments = $1.5 trillion
• Household Income = $19 trillion
• Exports = $400 billion
• Rate of Unemployment = 7.8%

1. What is the GDP? Show your calculations.

2. Using only the data above, is the economy in a recession?

Part III: 20%

Question One: The following production table provides estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume that these are just illustrative points on a spectrum of continuous input combinations.)

a)     Do the two inputs exhibit the characteristics of constant, increasing, or decreasing marginal rates of technical substitution? How do you know?

b)     Assuming that output sells for $3 per unit, complete the following tables:

c) Assume that the quantity of X is fixed at 2 units. If output sells for $3 and the cost of Y is $120 per day, how many units of Y will be employed?

d) Assume that the company is currently producing 162 units of output per day using 1 unit of X and 3 units of Y. The daily cost per unit of X is $120 and that of Y is also $120. Would you recommend a change in the present input combination? Why or why not?

Question two: The total cost equation of a firm is given by the equation where TC is total cost and Q is the level of output.

a. What is the firm’s total fixed cost?

b. What is the equation for the firm’s total variable cost (TVC)?

c. What is the equation for the firm’s average total cost (ATC)?

d. What is the equation for the firm’s marginal cost (MC)?

Question three: Characterize each of the following statements as true or false, and

explain your answer.

a)     If marginal revenue is less than average revenue, the demand curve will be downward sloping.

b)    Profits will be maximized when total revenue equals total cost.

c)     Marginal cost must be falling for average cost to decline as output expands.

d)     Marginal profit is the difference between marginal revenue and marginal cost and will always equal zero at the profit-maximizing activity level.

Question Four: The market for pizza has the following demand and supply schedules:

a)     Graph the demand and supply curves. What are the equilibrium price and quantity in this market?

b)     If the actual price in this market were above the equilibrium price, what would drive the market toward the equilibrium?

c)     If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium?

Question two: The total cost equation of a firm is given by the equation where TC is total cost and Q is the level of output.

a. What is the firm’s total fixed cost?

b. What is the equation for the firm’s total variable cost (TVC)?

c. What is the equation for the firm’s average total cost (ATC)?

d. What is the equation for the firm’s marginal cost (MC)?

In year 2017, suppose that people consume only three types of vegetables, X, Y and Z. They  purchase 100 units of X for $200, 50 units of Y for $75, and 500 units of Z for $100. In year  2018, they buy 75 units of X for $225, 80 units of Y for $120, and 500 units of Z for $100.  Based on the above information, calculate the price of each vegetable in each year. Using  2017 as the base year, calculate the Consumer Price Index (CPI) for each year. Compute the  inflation rate in 2018?

Fill in the blanks to make the following statements correct.

a. If nominal GDP increases by 35 percent over a​ 10-year period, then it is unclear how much of this increase is due to increases in _______(savings/outputs)

and how much is due to increases in _______(investment/prices)

 . To overcome this​ problem, we look at GDP valued at ________(constant/current)

 prices and we refer to this measure as _____(real/nominal)

national income.

If we want to look at changes in the cost of living, why don't we track differences in each households actual expenditures from one year to the next, rather than a market basket? Offer several reasons why this method would fail to capture changes in the overall price level automatically

Q: Suppose there are three types of Apples A, B, and C being sold and consumed. The demand and supply equations for each type are:

D_A= 20 - 2P_A + 4P_B + P_C , S_A= 4P_A - 5

D_B=10+3P_A - 5P_B + 2P_C , S_B=3P_B - 7

D_C = 70+4P_A +2P_B - 5P_C , S_C=5P_C - 16

• Determine equilibrium prices and quantities.
• Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results

Use the data in the basket of goods table to answer the five questions below. Please show your work.

Basket of Goods

Good

Quantity

Price in base year

Price in current year

Pepperoni pizza

15

$15.00

$17.50

Bottles of soda

30

$1.25

$1.50

Movie Tickets

12

$8.00

$10.00

4. The CPI for the current year is

5. The percentage change in the CPI from the base year to the current year was