TRƯƠNG THỊ QUỲNH NHƯ_INDIVIDUAL ASSIGNMENT 1_IB17C

1. (2.5 marks) GDP is defined as the market value of all final goods and services
produced within a country in a given period of time. In spite of this definition,
some production is left out of GDP. Explain why some final goods and services
are not included.
Answer:
First, GDP excludes some products because they are difficult to measure. These
products include goods and services performed by individuals for themselves and their
families, and most goods and services are manufactured and consumed at home and,
therefore, are never put on the market. For example, Anna mows the lawn in her
garden.
Second, illegal products are not included in GDP even if they are measurable because
by society's definition, they are bad goods, not commodities. Drugs are an example.
In addition, the value of intermediate goods and services, that is, the value of goods
and services used to create goods and services is ultimately not included in GDP. This
is because the value of intermediate goods and services has been incorporated into the
market value of the final goods and services. So, the inclusion of intermediate goods
and services in GDP will lead to the problem of double calculation and also lead to an
exaggeration of the actual value of GDP, and the results will be skewed. So goods and
services that are ultimately purchased for final consumption and are not resold or
reused to produce any other goods or services in that fiscal year are included in the
GDP calculation.
2. (2.5 marks) The population of is 150,000 people: 60,000 work their own
business, 30,000 work half-time but would prefer to work full-time, 15,000
would like to work but they have given up looking and take care their families,
15,000 are not interested in working because they are full-time students, 15,000
are looking for a job and 15,000 are retired.
a. What is the number of labor force?
b. What is the number of unemployed?
c. What is the unemployment rate?
d. Labor-force participation rate?
Answer:
a. The number of labor force:
Labor-force = employed + unemployed = 60,000+30,000+15,000 = 105,000
b. The number of unemployed is 15,000 people
c. The unemployment rate:

unemployed 15,000
u − rate = 100 x = 100 x = 14.29%
labor−force 105,000

d. Adult population = labor-force + not in labor-force

 = 105,000 + 15,000 + 15,000 + 15,000 = 150,000

Labor-force participation rate:

labor−force 105,000
𝐿𝐹𝑃𝑅 = 100 x = 100 x = 70%
adult population 150,000

3. (2.5 marks) Which is likely to have the larger effect on the CPI, a 2 percent
increase in the price of food or a 3 percent in-crease in the price of diamond
rings? Explain.
Answer:
A 2 percent increase in food prices will increase the CPI even more because the
portion of the market basket that includes food is much larger than the portion that
includes diamond rings.
4. (2.5 marks) Why is productivity related to the standard of living? In addition to
investment in physical and human capital, what other public policies might a
country adopt to increase productivity? Give one specific example of a nation
to prove its policy affect to productivity.
Answer:
Productivity is the amount of goods and services generated from each unit of input
labor; whereas, the standard of living means the material well-being of an ordinary
person in a given population. The level of productivity is the most important
determinant of a country's standard of living, with faster productivity growth leading
to better living standards. The income of an economy is the output of the economy. A
country can only enjoy a high standard of living if it can produce large amounts of
goods and services.
To increase productivity, other public policies a country can adopt are to encourage
foreign investment, promote research and development, promote education and
training, and promote domestic savings to have money invested in the means of
production. In addition, a country can increase productivity by regulating and
enforcing property rights, encouraging free trade, controlling population growth.
For example, Vietnam was previously known as a country with low average labor
productivity. But with innovative policies, Vietnam's labor productivity in recent
years has improved markedly. Firstly, the development of education and training has
always been identified by our Party and State as the leading national policy. In
particular, over the past time, children in ethnic minority and mountainous areas have
always been given special attention by the Party and the State, promulgating many
effective, encouraging and prioritized policies. Second, the state encourages foreign
investment. In recent years, Vietnam has always been an option for foreign investors
such as Japan, the US, and South Korea,... In addition, the State also encourages and
supports the development of science and technology. For example, tax policies for
the field of science and technology to mobilize and encourage non-budget
resources... All policies issued by the State of Vietnam are aimed at a common goal
of increasing labor productivity.