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- How do economists use a basket of goods and services to measure the price level?The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?4. Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living?
- 9. Answer the following macroeconomics questions.i. What is the difference between nominal GDP and real GDP? Which one of them is used tocalculate the economic growth rate? Justify your answer.ii. Give the equation used to calculate the unemployment rate. State the different types ofunemployment. In your opinion, which type is the most problematic one? Justify your answer.iii. Governments may achieve certain economic goals; say controlling inflation or boostingeconomic growth, by implementing fiscal and/or monetary policies. Briefly explain thedifference between fiscal and monetary policies3. Compute Nominal GPD, Real GDP, and GDP Deflator using the data below Compute the % change in Nominal GDP, Real GDP, and the Deflator Did economic well-being increase more in 2021 or 2022? Nominal Price$ Milk GDP Year Prince Real Qty Honey Honey Qty Nominal GDP % $ Milk GDP GDP Deflator change 2020 1 100 2 50 2021 1 200 2 100 2022 2 200 4 100 a. Calculating nominal GDP: show formulas and plug in numbers, and write in chart above b. Calculating real GDP (base year 2020): show formulas and plug in numbers, and write in chart above c. Calculating the GDP deflator: show formulas and plug in numbers, and write in chart above22. Which of the following is the technical definition of a recession? A. a fall in GDP for four consecutive quarters B. a rise in unemployment for two consecutive quarters C. a fall in GDP for two consecutive quarters D. a rise in unemployment for four consecutive quarters
- 2. Integrate in your writing what we understand by main economic indicators, coincident economic indicators and lagging economic indicators, and their relationship with the expression presented. 3. In your explanation of the relationship of the aforementioned indicators with macroeconomics, present examples, such as the impact of a pandemic or an atmospheric phenomenon on the economy of a country.8. Assume that below is some date from an economy that produces Basketballs and Fishes; Price of Basketballs Quantity of Basketballs (Units) 110 120 Year Price of Fishes (OMR) Quantity of Fishes (OMR) each 2019 2020 4 10 85 4.25 11 90 a) What is the growth rate of nominal GDP from year 2019 to 2020? b) What is the growth rate of real GDP from year 2019 to 2020 by using base year 2019? c) Did economic well-being increased or decreased from year 2019 to 2020? d) Why do you think we need to calculate the GDP? e) By considering all the limitation of the GDP, how do you think that GDP is still best indicator to measure the welfare of the country? f) Briefly highlight any three leading challenges faced by the countries to measure GDP.3. Solve the
- 1. Consider the following data on Prices and Quantities of T-Shirts and Pajamas on the attached image. (i) Calculate the total value of goods and services at current prices in this economy eachyear?(i) Calculate the total value of goods and services at constant prices in this economy eachyear? (Note: GDP deflator for 2015 is 100) (ii). Whatisthe growth rate of RealGDP between 2016and 2017? (iv). What wasthe growth rate ofNominalGDP between 2016and 2017?(v) Was the growth rate of real GDP higher or lower that the growth rate of nominalGDP?Explain. (vi) Using 2015 asthe base year, calculate the CPI for each year. (vii). Calculate the inflation rate for 2015, 2016 and 2017.4 Do you think that there is a stochastic trend? Explain why or why not1. Present a broader definition of macroeconomics and its relationship with the level of production, unemployment and inflation in a country. 2. Integrate in your writing what we understand by main economic indicators, coincident economic indicators and lagging economic indicators, and their relationship with the expression presented. 3. In your explanation of the relationship of the aforementioned indicators with macroeconomics, present examples, such as the impact of a pandemic or an atmospheric phenomenon on the economy of a country.