UNIT 2 Macroeconomics Answer Key - Denton ISD

1 advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, Broad economic GoalsPart AMeasuring EmploymentThe unemployment rate(UR) is defined asnumber ofunemployedUR = _____x 100labor forceThe labor force participation rate(LFPR) is defined as:number in labor forceLFPR =_____x 100adult populationHow well has the met the goal offull employment? Use the formulas just given to fill inthe last three columns ofFigure ofthe population and labor-force data are in Employment 1960 to 2000 CivilianNoninstitutionalPopulationLabor ForceAged 16 Civilian Labor ForceeeiUnemploymentParticipation_____Ye arand which year was the economy very close to full employment as indicated in the Humphrey-Hawkins Act?

2 Unemployment rate was the lowest in that has the labor force participation rate increased since the 1960s? More women and retireeshave entered or re-entered the labor the data on the national unemployment rate in Figure reflect the extent ofunemploymentamong a particular group in our society,such as teenagers aged 16 to 19? ,the data aretoo data do not provide information for different demographic 2nACTIVITY 11 AnswerKey UNIT400 advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, 2nACTIVITY 11 AnswerKey UNITPart BMeasuring Price Changeschange in CPIP rice change = _____x 100beginning CPIHere s the calculation for the example above.

3 165 150 Price change = _____x 100 = 10%150 Fill in the blanks in Figure ,and then use the data to Answer the ofThree Goods Compared with Base-Year PriceQuantityUnitUnitUnitBought inPrice inSpending inPrice inSpendingPrice inSpendingBase YearBase YearBase YearYear 1in Year 1 Year 2in Year 2 Whole pizza30$ $150$ $210$ $270 Prerecordedaudio $ $ $160 Six-pack $ $ $150 Total $480 $530 $ is the total cost ofbuying all the items in Year 2? $580 is the CPI for Year 2? [(580 / 480) x 100] is the percentage increase in prices from the base year to Year 2? August 2000 the CPI was ,and in August 2001 the CPI was was the percent-age change in prices for this 12-month period?

4 advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, CMeasuring Short-Run economic GrowthFigure and Real GDPN ominal GDPP rice IndexPopulationYear 3$5,00012511 Year 4$6, is the real GDP in Year 3? $4,000 [(100 x $5,000) / 125] is the real GDP in Year 4? $4,400 [(100 x $6,600) / 150] is the real GDP per capita in Year 3? $364 ($4,000 / 11) is the real GDP per capita in Year 4? $367 ($4,400 / 12) is the rate ofreal output growth between Years 3 and 4? 10% [(4,400 4,000) / 4,000] x 100 is the rate ofreal output growth per capita between Years 3 and 4?

5 (Hint:Use per-capita data in the output growth rate formula.) [(367 364) / 364] x 100 2 MacroeconomicsLESSON 2nACTIVITY 11 AnswerKey UNIT402 advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, 2nACTIVITY 12 AnswerKey UNITAll About GDPPart AIs This Counted as Part ofGDP?Which ofthe following are included and which are excluded in calculating GDP? Explain your monthly check received by an economics student who has been granted a government scholarshipExcluded: transfer payment from government to an farmer s purchase ofa new tractor Included: business fixed plumber s purchase ofa two-year-old used truck Excluded: Truck was not produced in a bond Excluded: Bond is a financial services ofa mechanic in fixing the radiator on his own car Excluded: This is a Social Security check from the government to a retired store clerk Excluded: transfer paymentfrom government to an increase in business inventories Included.

6 Inventory is an government s purchase ofa new submarine for the Navy Included: government purchase ofa barber s income from cutting hair Included: income from services received from the sale ofNike stock Excluded: Stock is a financial placement Economics Teacher Resource Manual National Council on economic Education,New York, BGDP:Is It Counted and Where? For each ofthe following items,write one ofthe following in the space provided:C ifthe item is counted as consumption ifthe item is counted as investment ifthe item is counted as government ifthe item is counted as net ifthe item is not countedin spend $ to attend a family pays a contractor $100,000 for a house he built for them this family pays $75,000 for a house built three years C accountant pays a tailor $175 to sew a suit for government increases its defense expenditures by $1,000,000, government makes a $300 Social Security payment to a retired buy General Motors for $1,000 in the stock I the end ofa year.

7 A flour-milling firm finds that its inventories ofgrain and flour are___ $10,000 above the amounts ofits inventories at the beginning ofthe homemaker works hard caring for her spouse and two I Motor new auto-making pay $300 a month to rent an I Computer a new factory in the United control buy a new Toyota that was made in pay tuition to attend 2 MacroeconomicsLESSON 2nACTIVITY 12 AnswerKey UNIT404 advanced placement Economics Teacher Resource Manual National Council on economic Education,New York, 2nACTIVITY 12 AnswerKey UNITPart CWhy Are Items Counted or Not Counted in GDP? count only the final retail price ofa new good or service in To avoid purely financial transaction will not be counted in A financial transaction does notinvolve production ofa good or is a transfer a homeowner does home-improvement work,the value ofthe labor is not counted The labor does not involve a market transaction,and it is difficult to compute thevalue.