Homework Macroeconomics
Question
1. List the two things that GDP measures. How can GDP measures two things at once?
GDP measures the total economy income and total output of goods and services. The reason why GDP measures two things at once is that the output of goods and services and total income, quantitatively, are the same. For instance, every dollar of expenditure by a buyer must become a dollar of income to a seller.
2. What does the consumer price index measure? How is it different from the GDP deflator?
Consumer Price Index (CPI) measures the price of a fixed basket of goods and service purchased by a typical consumer relative to the same basket in a base year.
First, the GDP deflator measures the prices of all goods and services produced, whereas the CPI measures the prices of only the goods and services bought by consumers.
Second, the GDP deflator includes only those goods produced domestically. Imported goods are not part of GDP and do not show up in the GDP deflator while the CPI includes the imported goods.
Third, the CPI assigns fixed weights to the prices of different goods, whereas the GDP deflator assigns changing weights.
3. List the three categories used by the Bureau of Labor Statistics to classify everyone in the economy. How does the Bureau compute the unemployment rate?
Three categories are employed, unemployed, and not in the labor force.
Unemployment Rate = Number of unemployed /Labor Force * 100
4. Describe the two ways the Bureau of Labor Statistics measures total employment?
Because the BLS conducts two surveys of labor-market conditions, it produces two measures of total employment. From the household survey, it obtains an estimate of the number of people who say they were working. From the establishment survey, it obtains an estimate of the number of workers firms have on their payrolls.
Problem
1. NEW YORK — Falling oil prices dragged the stock market lower on Monday as Exxon Mobil, Chevron and other big energy companies sank along with crude.
1. List the two things that GDP measures. How can GDP measures two things at once?
GDP measures the total economy income and total output of goods and services. The reason why GDP measures two things at once is that the output of goods and services and total income, quantitatively, are the same. For instance, every dollar of expenditure by a buyer must become a dollar of income to a seller.
2. What does the consumer price index measure? How is it different from the GDP deflator?
Consumer Price Index (CPI) measures the price of a fixed basket of goods and service purchased by a typical consumer relative to the same basket in a base year.
First, the GDP deflator measures the prices of all goods and services produced, whereas the CPI measures the prices of only the goods and services bought by consumers.
Second, the GDP deflator includes only those goods produced domestically. Imported goods are not part of GDP and do not show up in the GDP deflator while the CPI includes the imported goods.
Third, the CPI assigns fixed weights to the prices of different goods, whereas the GDP deflator assigns changing weights.
3. List the three categories used by the Bureau of Labor Statistics to classify everyone in the economy. How does the Bureau compute the unemployment rate?
Three categories are employed, unemployed, and not in the labor force.
Unemployment Rate = Number of unemployed /Labor Force * 100
4. Describe the two ways the Bureau of Labor Statistics measures total employment?
Because the BLS conducts two surveys of labor-market conditions, it produces two measures of total employment. From the household survey, it obtains an estimate of the number of people who say they were working. From the establishment survey, it obtains an estimate of the number of workers firms have on their payrolls.
Problem
1. NEW YORK — Falling oil prices dragged the stock market lower on Monday as Exxon Mobil, Chevron and other big energy companies sank along with crude.