Economics (CAB2)

Week 3
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Week 4

Workshop questions

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What is the distinction between nominal GDP and real GDP?

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 Let’s use some statistical knowledge to analyze the GDP of the Netherlands

Source: OECD (2022), Nominal GDP forecast (indicator). doi: 10.1787/dad11be4-en (Accessed
on 16 September 2022)
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Source: OECD (2022), Real GDP forecast (indicator). doi: 10.1787/1f84150b-en (Accessed
on 16 September 2022)
4
Let’s use some statistical knowledge to analyze the GDP
growth rate of the Netherlands
Please open the dataset. You should see the growth rate of nominal GDP and real GDP.

Task 1: Please calculate the (a) range

𝑅𝑎𝑛𝑔𝑒𝑁𝑜𝑚𝑖𝑛𝑎𝑙 = 𝐻𝑖𝑔h𝑒𝑠𝑡− 𝐿𝑜𝑤𝑒𝑠𝑡

𝑅𝑎𝑛𝑔𝑒𝑅𝑒𝑎𝑙 = 𝐻𝑖𝑔h𝑒𝑠𝑡 − 𝐿𝑜𝑤𝑒𝑠𝑡

Source:share
GDP andyour talent.
spending move
- Real the world.
GDP forecast 5
- OECD Data
Let’s use some statistical knowledge to analyze the GDP
growth rate of the Netherlands
Please open the dataset. You should see the growth rate of nominal GDP and real GDP.

Task 2: Create a box plot of the Nominal GDP.

Nominal GDP Source:share

GDP andyour talent.
spending move
- Real the world.
GDP forecast 6
- OECD Data
Let’s use some statistical knowledge to analyze the GDP
growth rate of the Netherlands
Please open the dataset. You should see the growth rate of nominal GDP and real GDP.

Task 3: Create a box plot of the Real GDP.

Real GDP Source:share

GDP andyour talent.
spending move
- Real the world.
GDP forecast 7
- OECD Data
Let’s use some statistical knowledge to analyze the GDP
growth rate of the Netherlands
Please open the dataset. You should see the growth rate of nominal GDP and real GDP.

Task 4: Please calculate the interquartile range.

Source:share
GDP andyour talent.
spending move
- Real the world.
GDP forecast 8
- OECD Data
Chapter 21 p. 554 Question 5&6

Tropical Republic produces only bananas and coconuts. The base year
is 2021, and the table gives the quantities produced and the market
prices.
Quantities 2021 2022
Bananas 800 bunches 900 bunches

Coconuts 400 bunches 500 bunches

     

Prices 2021 2022

Bananas $2 a bunch $4 a bunch

Coconuts $10 a bunch $5 a bunch

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Chapter 21 p. 554 Question 5&6
Quantitie 2021 2022
5. Calculate nominal GDP in 2021 and 2022 based upon final goods s
produced. Bananas 800 900
bunches bunches
Coconuts 400 500
bunches bunches
     
Prices 2021 2022
Bananas $2 a bunch $4 a bunch
Coconuts $10 a $5 a bunch
bunch

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Chapter 21 p. 554 Question 5&6
Quantitie 2021 2022
s
6. Calculate real GDP in 2022 expressed in base-year prices Bananas 800 900
based upon final goods produced. bunches bunches
Coconuts 400 500
bunches bunches
     
Prices 2021 2022
Bananas $2 a bunch $4 a bunch
Coconuts $10 a $5 a bunch
bunch

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Chapter 21 p.555 Question 9

Classify each of the following items as a final good or service or an

intermediate good or service and identify which is a component of
consumption expenditure, investment, or government expenditure on
goods and services:
 Financial services bought by China Investment Corporation
 Desktop computers bought by Barclays
 New taximeters imported from China by the London Taxi Company.
 New DVD bought by a student from Virgin Megastore.

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Chapter 21 p.555 Question 14&15

Use the following news clip to work Problems 14 and 15.

Gannett Outsourcing Nearly 500 Jobs to India

Gannett (the largest U.S. newspaper publisher by daily circulation) is
outsourcing 485 jobs to India.
Source: newjerseyglobe.com, December 11, 2020

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Chapter 21 p.555 Question 14&15

14. Explain how Gannett’s outsourcing to India will change India’s GDP.

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Chapter 21 p.555 Question 14&15

15. Explain how Gannett’s outsourcing to India will change U.S. GDP.

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 Before we move to the next economics question, let’s first look at the
monthly wages of agricultural employees in Cameroon and the Netherlands.

Source: Statistics on Statistics on wages - ILOSTAT

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Task 5: Use the Coefficient of Variation to check which country has more variation in wages.

Monthly wages
Year U.S. Dollars   U.S. Dollars
2016 Cameroon 269.89 Netherlands 3664.34
2017 Cameroon 274.45 Netherlands 3889.65
2018 Cameroon 297.02 Netherlands 4049.07
2019 Cameroon 181.79 Netherlands 3662.85

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Chapter 21 p.556 Question 25

25. One-third of Africans earn about $2 a day.

a. Why might GDP per person misrepresent the standard of living of the
average African?

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Chapter 21 p.556 Question 25

25. One-third of Africans earn about $2 a day.

b. Why might $2 a day underestimate the standard of living of the poorest
Africans?

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Chapter 22 p.571

1. What is the price level?

2. What is the CPI and how is it calculated?

3. How do we calculate the inflation rate and what is its relationship with the CPI?

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Chapter 22 p.578 Question 24
A typical family on Sandy Island consumes only juice and cloth. Last year, which was the
base year, the family spent $40 on juice and $25 on cloth. In the base year, juice was $4 a
bottle and cloth was $5 a length. This year, juice is $4 a bottle and cloth is $6 a length.
Calculate
a. The CPI basket.

b. The CPI in the current year.

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Chapter 22 p.578 Question 24
A typical family on Sandy Island consumes only juice and cloth. Last
year, which was the base year, the family spent $40 on juice and $25 on
cloth. In the base year, juice was $4 a bottle and cloth was $5 a length.
This year, juice is $4 a bottle and cloth is $6 a length. Calculate

c. The inflation rate in the current year.

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