College of Business Administration

ECON 1311- Macroeconomics

Homework 1

Student’s Name:
Student’s ID:
Course Section:

Mark out of % Letter grade

Maximum Grade 10 100 A+
Student’s Grade

Questions to CLO Mapping Max Weight Student

Grade Grade

CLO2.1 10 100%

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Short Answer Questions

1. Circular Flow Diagram

During 2020, flow A was $24.0 trillion, flow B was $18.1 trillion, flow C was $4.6 trillion, and
flow E was -$1.2 trillion.

a.) Calculate GDP (0.5 Points)

b.) Calculate Investments (1 Point)

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 2. GDP Growth Rates

Time Period GDP in trillion dollars

2019 301
Q1 2019 90
Q2 2019 75
Q3 2019 70
Q4 2019 76
2020 270
Q1 2020 92
Q2 2020 55
Q3 2020 65

a.) Calculate the annual growth rate of GDP in 2020. (0.5 Points)

b.) Calculate the quarter-on-quarter GDP growth rate for the third quarter of 2020. (0.5 Point)

c.) Calculate the year-on-year GDP growth rate for the third quarter of 2020. (0.5 Point)

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 3. Nominal versus Real GDP

The Desert Republic produces only sheep and oil. The base year is 2010 and the table below
gives the quantities produced and the market prices.

2010 Price Quantities

Sheep $80 per sheep 15,800 sheep
Oil $60 per barrel 13,100 barrels
2020
Sheep $90 per sheep 17,500 sheep
Oil $85 per barrel 11,500 barrels

a.) Calculate nominal GDP in 2020 (1 Point)

b.) Calculate real GDP in 2020 (1 Point)

4. Labor Market

The table below shows the results of a labor survey for an imaginary country. Use the numbers
to answer the question below.

Population Working age Non-working age Labor force employed unemployed

population population
300,000 220,000 80,000 173,600 153,450 20,150

a.) Calculate the unemployment rate and calculate the labor force participation rate (2 Points)

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 Labor Market

b) What is the equilibrium wage in the above labor market? (0.5 Points)

c) If there is a minimum wage of 18 dollars per hour, how many people are unemployed in
the above labor market? (0.5 Points)

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 5. Inflation
A typical family in forest country consumes only nuts and orange juice. Last year, which was the
base year, the family bought 30 tons of nuts and 70 gallons of orange juice. In the base year,
nuts cost $550 a ton and orange juice cost $250 per gallon. This year, a ton of nuts costs $540
and a gallon of orange juice costs $247.

a.) Calculate the Consumer Price Index (CPI) and calculate the inflation rate. (2 Points)

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