Hans Adi / 2301874790

Jennifer Andriani / 2301858433

Jennifer Carlise / 2301892036

MACROECONOMICS (GSLC)
1. Explanation
a. Consumption increases because a refrigerator is a good purchased by a
household.
b. Investment increases because a house is an investment good.
c. GDP is not affected because nothing new is produced.
d. Consumption increases because a haircut is a service purchased by a
household
e. Consumption increases because a car is a good purchased by a household,
but investment decreases because the car in Ford's inventory had been
counted as an investment good until it was sold.
f. Investment increases because a car is an investment good to the car rental
company.
g. Government purchases increase because the government spent money to
provide a good to the public.
h. GDP is not affected because a Social Security check is a transfer payment,
not a government purchase.
i. Consumption increases because the is a good purchase by a household, but
not exports decrease because the bottle was imported.
j. Investment increases because new structures and equipment were built.

2.

Year  Real GDP  Nominal GDP GDP

(in 2000 dollars) (in current dollars) (base year 2000)

1970 3,000 1,200 40

1990 5,000 3,000 60

1990 6,000 6,000 100

2000 8,000 8,000 100

2010 7,500 15,000 200

2020 10,000 30,000 300

2030 20,000 50,000 250

3. Transfer payment is excluded on GDP because they are not payments for goods
or services, but rather means of allocating money to achieve social ends.
4. If GDP included goods that are resold, it would be counting output of that
particular year, plus sales of goods produced in a previous year. It would be
double-count goods that were sold more than once and would count goods in
GDP for several years if they were produced in one year and resold in another.

5. Compute nominal GDP, real GDP and the GDP deflator for each year, using
2005 as the base year. 

Calculating nominal GDP: 

2005: ($1 x 100m) + ($2 x 50h) = $200
2006: ($1 x 200m) + ($2 x 100h) = $400
2007: ($2 x 200m) + (4 x 100h) = $800

Calculating real GDP (base year 2005):

2005: ($1 x 100m) + ($2 x 50h) = $200
2006: ($1 x 200m) + ($2 x 100h) = $400
2007: ($1 x 200m) + ($2 x 100h) = $400

Calculating the GDP deflator: 

2005: ($200/$200) x 100 = 100
2006: ($400/$400) x 100 = 100
2007: ($800/$400) x 100 = 200

6. The following table provides answers and calculations for Questions A, B, and C. 

Answer A Answer B Answer C

Quantity Price Nominal GDP Real GDP GDP

produced (Quantity x Price) (Quantity x Year 1 Price) Deflator
3.00 $4 $12.00 $12.00 1
4.00 $5 $20.00 $16.00 1.25
5.00 $6 $30.00 $20.00 1.5

a. The nominal GDPs are the following:

Year 1 = $12
Year 2 = $20
Year 3 = $30

b. The real GDPs are the following:

Year 1 = $12
Year 2 = $16
Year 3 = $20

c. The GDP Deflators are the following:

Year 1 = 1
Year 2 = 1.25
 Year 3 = 1.5

d. The percentage growth rate of real GDP from Year 2 to Year 3 is 25%.
The percentage of real growth from Year 2 to Year 3 is found with the
following equation: (Real GDP Year 3 / Year GDP Year 2 - 1) * 100. 
($20/$16 - 1) * 100 = 25% 

e. The inflation rate as measured by the GDP deflator from year 2 to year 3 is
20%
The inflation rate from Year 2 to Year 3 is found with the following equation:
(Year 3 GDP Deflator / Year 2 GDP Deflator - 1) * 100. 
(1.5/1.25 - 1) * 100 = 20% 

f. Finding these values in economies with more than one product becomes
complicated since the quantities and prices will vary and affect the GDP with
different weights. However, since there is only one product these values could
be found in simpler ways.

7.
a. The growth rate of GDP = 17.419 - 7.309 / 17.419 * 100% = 58.04%
b. The growth rate of deflator = 108.3 - 73.8 / 108.3 * 100% = 31.8%
c. Real GDP in 1994 = 7.309 / (73.8 / 100) = $9.903
d. Real GDP in 2014 = 17.419 / (108.3 / 100) = $16.084
e. The growth GDP real = (16.084 - 9.903) / 9.903 * 100% = 62.4%
f. The growth rate of real GDP is slower than nominal GDP because real GDP
exclude the inflation of goods produced.

8. Nominal GDP (measured in current prices) according to the BEA in quarter 4 of

2013 is 17,102.5 thousand billion dollars ad real GDP is 15,965.6 thousand billion
dollars (measured in 2009 dollars). 

The percentage change in the two is as follows:

Nominal GDP: 4.6%
Real GDP: 3.2%

Both values indicate that the economy is growing. Real GDP grew at a lower rate
because it does not include any of the increases in price that occurred. This is
also why nominal GDP was higher than real GDP. In other words, inflation
occurred in the economy.

The following values of consumption, government, investment, and net exports

are seasonally adjusted and come from the most recent data:

Consumption (measured in billions):

2010: 10,711.8
2011: 11,149.6

Government (measured in billions):

2013 Quarter 3: 4,832.0
 2013 Quarter 4: 4,623.6

Investment (measured in billions):

2013 Quarter 2: 2,993.4
2013 Quarter 3: 3,052.4                                        
                                                   
9. Explanation
a. What is the impact of this process on GDP in this economy? 
GDP = $180, It’s because GDP only measures final goods.

b. Value added is defined as the value of a producer's output minus the value of
the intermediate goods that the producer buys to make the output. Assuming
there are no intermediate goods beyond those described above, calculate the
value added of each of the three producers. 
 Value added from bread $180 – $150 = $30
 Value added from flour $150 – $100 = $50
 Value added from wheat = $100

c. Total value added = $180, it will increase the GDP by $180. This example
suggest that GDP can be measured also by total investment + total value
added.

10. In countries like India, people produce and consume a fair amount of food at
home that is not included in GDP. So GDP per person in India and the United
States will differ by more than their comparative economic well-being.

11.
a. Increasing female labor force participation rates creates an opportunity for
countries to increase the size of their workforce and achieve additional
economic growth.

b. There are many aspects in the measure of wellbeing. GDP itself only measure
how good the economy is doing, it's measuring the wealth of a country. So the
correlation is: in general, when the country is less wealthy, the level of
wellbeing will be lower than the wealthy country. Vice versa.

c. Other aspects of well-being that are associated with the rise in women's
increased labor-force participation include increased self-esteem and prestige
for women in the workforce, especially at managerial levels, but decreased
quality time spent with children, whose parents have less time to spend with
them. Such aspects would be quite difficult to measure.

12.
a. GDP equals the dollar amount to Barry collects, which is    $ 400.  
b. Net national product = GDP - depreciation = $400 - $50 = $350.
c. National income = NNP - sales tax = $350 - $30 = $320.
d. Personal income = national income - retained earnings = $320 - $100 = $220.
 e. Disposable personal income = personal income - personal income tax = $ 220
- $70 = $150.

Rangkuman BAB 24

Consumer price index is a measure of the overall cost of the goods and
services bought by a typical consumer. It is a way for turning dollar figures into
meaningful measures of purchasing power. It is used to monitor changes in the cost
of living over time. 
The goal of the consumer price index is to measure changes in the cost of
living

When the consumer price index rises, the typical family has to spend more
money to maintain the same standard of living. Economists use the term inflation to
describe a situation in which the economy’s overall price level is rising. The inflation
rate is the percentage change in the price level from the previous period. 

Steps to calculate the CPI:

1. Determine which prices are most important to the typical consumer. 
2. Find the prices of each of the goods and services in the basket at each point
in time
3. Use the data on prices to calculate the cost of the basket of goods and
services at different times
4. Designate one year as the base year, the benchmark against which other
years are compared.
5. Use the consumer price index to calculate the inflation rate

Problems in measuring CPI:

1. When prices change from one year to the next, they do not all change
proportionately: Some prices rise more than others,
2. When a new good is introduced, consumers have more variety from which to
choose, and this in turn reduces the cost of maintaining the same level of
economic well-being,
3. Unmeasured quality change: If the quality of a good deteriorates from one
year to the next while its price remains the same, the value of a dollar falls,
because you are getting a lesser good for the same amount of money.

2  important differences of GDP deflator and CPI:

1. GDP deflator reflects the prices of all goods and services produced
domestically, whereas the consumer price index reflects the prices of all
goods and services bought by consumers.
2. While the consumer price index compares the price of a fixed basket of goods
and services to the price of the basket in the base year, the GDP deflator
compares the price of currently produced goods and services to the price of
the same goods and services in the base year. 
 So the CPI is basically used to calculate are you actually getting richer by
earning more. Well, the theory suggests that if you put a certain amount of money in
your bank account with positive interest rate, your money will increase gradually. But
does it mean you could actually buy more goods? It depends on the interest rate
compared to the change of CPI.

When comparing dollar figures from different times, it is important to keep in

mind that a dollar today is not the same as a dollar 20 years ago or, most likely, 20
years from now.