Unit 2 FRQ Practice–8 pts each + 8 points for following directions

Use the following lined pages to answer your questions. USE A PEN. Submit with the question sheet.
1. Remember to SKIP lines between each answer. Ex: Write 1 (a) then answer. Skip a line.
Write 1(b) and answer. Skip a line and write 2 (a) and answer and so on.
2. Also, be sure to show your work. Automatic - 8 if you do not follow these instructions.

1. The following grid represents Country X.

2015 2020

Value of the average market basket $20,000 $24,000

Average wages per week (nominal) $2,000 $2,200

1 (a) What is the value of the CPI in 2020?

1 (b) What is the real wage per week in 2015?

2. Country X produces only two goods, TVs and chicken sandwiches.

2 (a) Draw the PPC model for Country X. Be sure your model is correctly and thoroughly labeled. You
will use the model you have just drawn for the following questions.

2 (b) Today, there is an unemployment rate of 6% in Country X. Using Point A, label this
unemployment rate onto the model.

2 (b) Oh no! An earthquake hits Country X and one week later, there are 40 people who are
unemployed and 160 people who are employed. Calculate the Unemployment Rate for Country X and, using
the model you have just drawn, show the effect of the earthquake on Country X’s PPF.

3. Use the e-glass video to help you complete the following questions..

3 (a) What is the inflation rate in Jasminia?

3 (b) If workers receive a raise of 30%, did their real income increase, decrease or remain the same.
Explain. This is a two-part question.

3 (c) Your parents live in Jasminia, where the inflation rate was 2% in 1998. So, in 1998, your parents
purchased the house you now live in at a 4% fixed mortgage (interest) rate. Who is better off today, your
parents, the mortgage company who loaned them the money, or is the answer indeterminate? Explain. This is
a two-part question.
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 la Market basket current
yearprice 241000
x 100 2 100 120
Market basket base 20,000
year price

Nominalwage 2
1lb Priceindex 400 8 20 100 2,000

S
la consignoption
PPF

Chickeyandwiggertion

TVs
2lb consumption

goof PPF
A
Chicksenandwiggertion

4
26 Unemployment Rate cake 100
0 100 0.2 100 207
LaborForce 40 160 200
TVS
consignoption
PPF
A

Chicksenandwiggertion

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 CPI current cplbase
3a Inflation Rate
CPI base X100 1508 5,80 5 100 50

3lb The real wages would decrease because

it would take into account

the 50 inflation rate and a 304 raise would hold less value

due to inflation The nominal

wage is fixed in the short run and it cannot
meet the increase in the Price Level so theworkers would have less
purchasing power

36 The parents are better off because the inflationrate is

504 in repay the lenders
Tasmania dollars that haveless value
so they would with

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 This study source was downloaded by 100000859999077 from CourseHero.com on 01-30-2024 20:56:17 GMT -06:00

https://www.coursehero.com/file/157505820/Unit-2-FRQ-Practice-MACRO-2022pdf/
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