Macroeconomics
Answer the following 6 questions. Must be 3-4 pages in length. Must use APA format.
1. (Aggregate Demand and Supply) Review the information on demand and supply curves in Chapter 4. How do the aggregate demand and aggregate supply curves presented in this chapter differ from the market curves of Chapter 4? (I attached the photos required to answer this question)
2. (Supply-Side Economics) One supply-side measure introducted by the Reagan adminstration was a cut in income tax rates. Use an aggregate demand/aggregate supply diagram to show what effect was intended. What might happen if such a tax cut also shifted the aggregate demand curve?
3. (Income approach to GDP) How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. Consider the following data for selling price at each stage in the production of a 5-pound bag of flour sold by your local grocer. Calculate the final market value of the flour.
Stage Of Production Sale Price
Farmer $0.30
Miller 0.50
Wholesaler 1.00
Grocer 1.50
4. (Expenditure Approach to GDP) Given the following annual information about a hypothetical country, answer question a through d.
Billions of Dollars
Personal consumption expenditure $200
Personal taxes 50
Exports 30
Depreciation 10
Government purchases 50
Gross private domestic investment 40
Imports 40
Government transfer payments 20
a. What is the value of the GDP?
b. What is the value of net domestic product?
c. What is the value of net investment?
d. What is the value of net exports?
5. (Investment) Given the following data, answer question a through c.
Billions of dollars
New residental construction $500
Purchases of existing homes 250
Sales value of newly issued stocks and bonds 600
New physical capital 800
Depreciation 200
Household purchases of new furniture 50
New change in firms inventories 100
Production of new intermediate goods 700
a. What is the value of gross private domestic investment?
b. What is the value of net investment?
c. Are any intermediate goods counted in gross investment?
6.(Consumer Price Index) Given the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2013 in each of the following situations.
a. The CPI equals 200 in 2012 and 240 in 2013.
b. The CPI equals 150 in 2012 and 175 in 2013.
c. The CPI equals 325 in 2012 and 340 in 2013.
d. The CPI equals 325 in 2012 and 315 in 2013.
