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Individual Assignment 1

The document is an individual assignment for an economics course. It contains 6 multiple choice questions regarding macroeconomic concepts such as unemployment rate calculation, effects of the internet on frictional unemployment, and the impact of unemployment insurance on unemployment rate. It also includes questions about calculating GDP from business transactions and the components of GDP. The final question involves calculating the percentage increase in the consumer price index between two years given price changes of different goods.

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121 views4 pages

Individual Assignment 1

The document is an individual assignment for an economics course. It contains 6 multiple choice questions regarding macroeconomic concepts such as unemployment rate calculation, effects of the internet on frictional unemployment, and the impact of unemployment insurance on unemployment rate. It also includes questions about calculating GDP from business transactions and the components of GDP. The final question involves calculating the percentage increase in the consumer price index between two years given price changes of different goods.

Uploaded by

Tu Nong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: Nông Ngọc Tú

Student ID: HS170912

ECON 121: MACROECONOMICS PRINCIPLES

INDIVIDUAL ASSIGNMENT

Deadline: Midnight, Feb 18th , 2023. Submissions accepted only via Edunext.

Each question is worth 1 point, except for question 6, which is worth 2 points

You get 3 points for free for just submitting this assignment, meaning even if you got all the
wrong answers, your minimum score is 3 points.

Question 1: In the town of Gotham the adult population is 560 thousand, the number
unemployed is 25 thousand, and 185 thousand are not in the labor force. Calculate the
unemployment rate.

Number of labor force = 560000 – 185000 = 375000

 U-rate = x 100 = 6.67%

Question 2: Provide a reason why Internet might help reduce frictional unemployment.

In the labor market, frictional unemployment is a result of worker turnover, employees leave this
job to choose a new job. Using the internet, people have been able to regain employment faster,
thus reducing the amount of time they would have been out of work. It is also possible to earn
money by working from home with the help of the web. In response to people's demand for more
information, new media like YouTube, streams, and blogs have emerged to fulfill people's needs.
Online job postings and social media can help workers find jobs quickly, leading to faster hiring
times. Therefore, similar to the industrial revolution and computer revolution before it, the
Internet helped grow employment and reduce frictional unemployment.
Question 3: How does unemployment insurance affect rate of unemployment (increase or
decrease)? Why?

The purpose of unemployment insurance is to get people to claim that they are seeking
employment so that they can collect benefits. Unemployment insurance might increase the
number of spells of unemployment as well as its duration. Without the benefits, workers would
require a higher wage to work in a relatively unstable job, especially a seasonal one. . According
to Feldstein, unemployment insurance reduces the necessary wage premium because workers
know they can collect benefits after they are laid off.

Assistance programs from the government contribute to long-term unemployment by providing


incentives and means not to work. In effect, the system subsidizes unstable employment,
permitting it and the number of spells of unemployment to increase. This subsidy would not exist
if the "experience-rating" method of financing unemployment insurance benefits succeeded in
charging the firm for benefits received by employees it has laid off.

In order to obtain a job, unemployed people insist on a minimum wage they want as their
reservation wage. Therefore, an unemployed person becomes unemployed longer when they
receive unemployment benefits and other social assistance programs.

Question 4: A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to
make candy that sells for $200, what is the total contribution to GDP from these transactions?

GDP is the market value of all final goods & services produced within a country in a given
period of time.

A farmer sells sugar to a candy producer for $150

If the producer uses this sugar to make candy that sells for $200, the final good is candy Total
contribution to GDP from these transactions is $200
Question 5: Last quarter Newton computers produced 3,000 computers. Two thousand of these
computers were sold to households, 750 were sold to businesses, and 250 were added to
Newton’s inventory. How many of the computers should have been included in last quarter’s
GDP?

Last quarter Newton computers produced 3000 computers.

2000 of these computers were to households, 750 were sold to business, and 250 were added to
Newton’s inventory

 Consumption rises by 2000 computers


 Investment rises by 750 computers
 Inventory investment rises by 250 computers
 Number of computers should have been included in last quarter’s GDP is 3000 computers

Question 6:

In a simple economy, people consume only 2 goods, food and clothing. The market basket
of goods used to compute the CPI consists of 50 units of food and 10 units of clothing.

Food Clothing
2002 price per unit $4 $10
2003 price per unit $6 $20

a. What are the percentage increases in the price of food and in the price of clothing?

The price of food increases by x 100 = 50%

The price of clothing increased by x 100 = 100%

b. What is the percentage increase in the CPI?

In 2002, the market basket cost is 4 x 50 + 10 x 10 = $300


In 2003, the market basket cost is 6 x 50 + 20 x 10 = $500
The percentage increase in the CPI is x 100 = 66.67%

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