Name: Nguyễn Như Cường

Student ID: HS150449

ECON 121: MACROECONOMICS PRINCIPLES

INDIVIDUAL ASSIGNMENT

Deadline: Midnight, Jan 21st, 2022. Submissions accepted only via Google Classroom.
Each question is worth 1 point, except for question 6, which is worth 2 points
You get 3 points for free for just submitting this assignment, meaning even if you got all the
wrong answers, your minimum score is 3 points.

Question 1: In the town of Gotham the adult population is 560 thousand, the number
unemployed is 25 thousand, and 185 thousand are not in the labor force. Calculate the
unemployment rate.
Answer:
Gotham's current adult population is 560 thousand, but 185,000 are out of the workforce,
meaning there's no work:
560,000 - 185,000 = 375,000 people
Unemployment is 25,000 people and adults after subtracting people not participating in the labor
force is 375,000.
=> The unemployment rate in Gotham: (25,000/375,000) x 100 = 6.66%

Question 2: Provide a reason why Internet might help reduce frictional unemployment.
Answer:
The effect of voluntary employment transfers within an economy is frictional unemployment.
For example, if you work for business A but have resigned and are seeking for a new job, this is
referred to be frictional unemployment.
However, there is much in the 4.0 revolution that the Internet has helped to tackle frictional
unemployment: job matching services on the Internet may assist the jobless find jobs faster.
Workers can simply identify which jobs to apply for if the database is comprehensive for all
positions. Because private sector rivalry might damage the market, the government may be
required to create a complete employment matching service.

Question 3: How does unemployment insurance affect rate of unemployment (increase or

decrease)? Why?
Answer:
Unemployment insurance is a critical mechanism for supporting and sharing the financial burden
of employees who are looking for work. However, when the opportunity cost of getting fired and
the urgency of seeking a job decreases, the unemployment rate rises. The longer an employee is
entitled to pay unemployment insurance premiums, the longer his or her duration of unemployed.
An example of this is October 2009 The unemployment rate in the United States spiked to 10%
in May. With such a skyrocketing unemployment rate, policymakers have taken steps to
significantly expand the unemployment insurance system. They have significantly increased the
duration of the program, allowing eligible workers to receive benefits for up to 99 weeks in some
cases. With unemployment rising sharply and then continuing to soar, it is important for workers
looking for work to be able to reap the benefits.

Question 4: A farmer sells sugar to a candy producer for $150. If the producer uses this
sugar to make candy that sells for $200, what is the total contribution to GDP from these
transactions?
Answer:
GDP is a metric used to measure the total market value of all such final goods and services
produced, it costs $150 to buy sugar and the producer uses it to make candy. The final value
made is the Total Contribution and GDP of this candy farmer is $200.

Question 5: Last quarter Newton computers produced 3,000 computers. Two thousand of
these computers were sold to households, 750 were sold to businesses, and 250 were added
to Newton’s inventory. How many of the computers should have been included in last
quarter’s GDP
Answer:
Newton produced 3000 computers. The first time sold 2,000 units for households, the second
time for 750 units for businesses. Finally, 250 were added to the Newton inventory, and this
inventory was finished because the computer was manufactured.
=> 2000 + 750 + 250 = 3000 calculators included in GDP last quarter

Question 6:
In a simple economy, people consume only 2 goods, food and clothing. The market
basket of goods used to compute the CPI consists of 50 units of food and 10 units of
clothing.

Food Clothing
2002 price per unit $4 $10
2003 price per unit $6 $20

a.What are the percentage increases in the price of food and in the price of clothing?
Answer:
Rate of price increase= (price in 2003 - price in 2002) / price in 2002 x 100.
-Rate of increase in food prices: (6 - 4) / 4 x 100 = 50%.
-Rate of increase in clothing prices: (20 - 10) / 10 x 100= 10%.

b.What is the percentage increase in the CPI?

Answer:
CPI from 2002-2003 rate of increase in food and clothing prices, includes 50 food units and 10 clothing units:

-According to 2002 prices, this basket will cost: (50 x4) + (10 x10) = $300.

-Similarly, a basket of goods at 2003 prices would cost: (50 x 6) + (10 x 20) = $500.

=>The percentage increase in the CPI= (2003 basket price - 2002 basket price) / 2002 price basket x100.
% change = (500 - 300) x 300 x100 = 66.67%