Individual Assignment ECO121

Your Name: Nguyễn Thị Thùy Dương

Roll Number: CS170142

Chapter 23
A U.S.-owned car factory in Mexico produces $5 million of cars. $2.5 million of these
cars are sold in Mexico and the other $2.5 million are sold in the U.S. In both cases $1
million of the value of the cars was due to U.S-owned equipment located in Mexico
and U.S. managers working in Mexico. How much did this production contribute to
U.S. GDP?
Answers:
- The amounted contributed to U.S.GDP is $2 million

- Explanation: First and foremost, the question reiterated that $1 m is due to U.S-owned
equipment companies and U.S managers working in Mexico, this is where the key to
unlocking the question lies.
On the basis that the money is shared equally between the equipment company and the U.S
managers working in Mexico, each group gets $500,000 which is an input for the car
manufacturer. However, $2.5m worth of cars are sold to U.S-an output, deducting the
$500000 due to the managers from the output value gives $2m

Chapter 24
Suppose a basket of goods and services has been selected to calculate the CPI and
2012 has been selected as the base year. In 2012, the basket’s cost was $50; in 2014,
the basket’s cost was $51; and in 2016, the basket’s cost was $52. What was the
value of the CPI in 2014?
Answers:
- CPI in base year = 100 
CPI (2013) = 84/80 x 100 = 105 
CPI (2014) = 87.6/80 x 100 = 109.5

Chapter 28
In 2015 the Japanese adult non-institutionalized population was 110.7 million, the
labor force was 66 million, and the number of people employed was 63.7 million.
According to these numbers, the Japanese labor-force participation rate and
unemployment rate were about
Answers:
Population =110.7 m 
Labour force =66m 
Number of employed =63.7m 
Labour force =(Labor Force ÷ Civilian Noninstitutional Population) x 100
Lf = 66/110.7 *100 
Lf =59.62% 
UR =Lf -employed/Lf 
UR = 66-63.7/66 
UR =3.48% or 3.5%

Chapter 25
What are determinants of productivity? How can we improve productivity? Give
short answers.
Answers:
(1)Physical capital, which is the stock of equipment and structures that are used to produce
goods and services
(2) Human capital, which consists of the knowledge and skills that workers acquire through
education, training, and experience
(3) Natural resources, which are inputs into production that are provided by nature
(4) Technological knowledge, which is society’s understanding of the best ways to produce
goods and services.
Investing in your employees is a good way to get higher productivity, better labour
efficiency, and increased engagement. 

- Employee Satisfaction

Employment satisfaction is another useful productivity measurement closely related to

employee engagement. 

Unsatisfied employees have low engagement at the workplace, which results in decreased
labor input and productivity. 
Job satisfaction might be affected by many determinants, so make sure you get adequate
feedback from your employees. This way, you can improve their work environment and
workload based on what they tell you. 
This can increase their satisfaction since they see that you care not only for the bottom line of
your business but also for your employees’ well-being.
-Employee Training

Training is a significant productivity factor that should be comprehensive and thorough. Take
your time, talk to your employees, and explain how their role affects the organization’s
operations, so they see the big picture. 

This way, you increase their capability of handling general things on their own, rather than
merely giving them role-specific know-how and limiting their learning. 

-Technology

Almost every modern business is highly reliant on technology these days, and they’re always
on the lookout for the next best app or tool.
It’s important to note that this technological change is crucial for achieving productivity level
increase. Improving technical factors like these can help you do more with less and
tremendously increase your productivity growth.
Chapter 29
1. What are the differences between M1 and M2?
2. Suppose that reserve requirment ratio is 25% and public hold 1 billion USD,
calculate Money supply?
Answers:
1. M1: Liquid money-asset transactions
M2: Broader measure
2. Money multiplier = 4 
The maximum possible gain in deposit is 4 x 1 million USD = 4 million USDN
Money supply = 3 million USD

Chapter 30
1. What are the differences between norminal wage and real wage?
2. The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent.
What is the real interest rate?
Answers:
1. Real wages
Definition: Compensation that considers inflation rate
Determinants: Inflation
Formula: RW
Purpose Determine and maintain purchasing power
Time Frame: Considers different past periods

Nominal wagewage
Definition: Payment for labor done with no market condition consideration
Determinants: Government regulations
Formula: No formula
Purpose: Compensate for work done
Time Frame: Considerations are at that point in time

2. The real interest rate = The nominal interest rate + The inflation rate
= 3.5 + 1.5
= 5 percent
Chapter 3

Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.

 Hours Needed to Make 1 Quantity Produced in 2400 Hours

 
Car Airplane Cars Airplanes
Japan 30 150 80 16
Korea 50 150 48 16
Compute Japan and Korea opportunity cost of one airplane ?

Answers:
-Japan’s opportunity cost of one aeroplane 0
-Korea’s opportunity cost of one aeroplane ⅓ ( 16/48)

Chapter 31
1. Suppose you are American, an Iphone is 999$ in the US and it is 25,000,000
VNĐ in Vietnam. The exchange rate of USD to VND is 23,150. Compute the
real exchange rate.
2. Last year a country had exports of $50 billion, imports of $60 billion, and
domestic investment of $40 billion. What was its saving last year? Answer:
Answers:
1. (e x P) / P* = (23.150 x 999) / 25000000 = 0.93
2. GDP = Exports - Imports + Domestic Investment = $50 billion - $60 billion + $40
billion = $30 billion
C + G = $60 billion + $0
Saving = GDP - C - G = $30 billion - $60 billion - $0 = -$30 billion

Chapter 32
3. Suppose the policy makes people decrease their investment. What is the
effect to:
a. Interest rate?
b. NCO?
c. Real exchange rate?
d. NX?
Answers:
a. Interest rate: Decrease
b. NCO: Increase
C. Real exchange rate: Decrease
c. NX: Increase
- There is a general tendency for interest rates and the rate of inflation to have an
inverse relationship.In general, when interest rates are low, the economy grows, and
inflation increases.Conversely, when interest rates are high, the economy slows and
inflation decreases.

Chapter 33
3. What things make LRAS to shift?
Answers:
- The long-run aggregate supply curve (LRAS) is determined by all factors of
production - the size of the workforce, size of capital stock, levels of education, and
labour productivity. If there was an increase in investment or growth in the size of
the labour force this would shift the LRAS curve to the right.

Chapter 34
1. If the real-estate market increases fastly, what will happen to the output?
What should the Government do?
2. What should the Government do in recession?
Answers:
1. - If the real estate market increases rapidly, the output will be redundant if the quantity
wanted to buy is not available.
- The Government requires localities to strengthen auctions of land use rights; bidding for
projects using land; approve the project investment policy; Investor selection is the
determination of land prices, calculation of land use fees, and land lease for project
implementation to increase supply for the real estate market.

2. When confronted by a depression, the government must neither lend, nor borrow, nor
print money, nor tax and spend to stimulate, but instead should devote its meagre
resources (as tax revenues will be down) to: Maintaining the legal framework (law courts
and police); Deregulation and reducing the size of government.