Interpret the main economic indicators used in AP Macroeconomics, including GDP, unemployment, CPI, inflation, real values, nominal values, and business-cycle conditions.
The table provided shows the quantity and price of food and clothing, the only two goods produced and consumed in the country of Maltrose, in year 1 and year 2. Assume that year 1 is the base year.
Calculate the nominal GDP in year 2. Show your work.
Calculate the GDP deflator in year 2. Show your work.
What was the numerical value of the inflation rate from year 1 to year 2 ?
Assuming that the expected inflation rate between years 1 and 2 was 3%, were each of the following better off, worse off, or unaffected as a result of the economic conditions between year 1 and year 2 ?
People living on a fixed income
Borrowers with fixed interest-rate loans. Explain.
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GDP does not fully measure a nation's economic performance because it fails to account for which of the following?
Exports of goods and services
Government spending
Business spending on physical capital
Consumer spending on durable goods
Nonmarket transactions
Assume that in the country of Zeta, the civilian noninstitutional population aged 16 and over is 1,000,000. The labor force participation rate is 70%, the unemployment rate is 9%, and the natural rate of unemployment is 5\%.
Calculate the number of people in Zeta that are unemployed. Show your work.
Is the economy of Zeta currently experiencing a recessionary gap, an inflationary gap, or no output gap? Explain.
If some individuals who are counted as unemployed in Zeta looking for work, what will happen to each of the following?
The labor force participation rate. Explain.
The unemployment rate
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The table provided shows economic data for the country of Louland. The base year is year 1, and the GDP deflator in year 2 is 115.
Calculate real GDP in Louland in year 2. Show your work.
What was the numerical value of the inflation rate from year 1 to year 2 ?
If nominal wages increased by 10\% from year 1 to year 2, what happened to the real wages of workers in Louland during this time? Explain.
Begin your response to this question at the top of a new page in the separate Free Response booklet and fill in the appropriate circle at the top of each page to indicate the question number.