03 Jun Question 1. You will need the following links for answering this question: Nominal Wage (call it W) and
Question
1. You will need the following links for answering this question: Nominal Wage (call it W) and
Consumer Price Index (call it P) in the US economy1.
We want to study two recessions in the US economy. The following table shows the periods of
these recessions2:
period of recession
(month/year)
1 11/1973 03/1975
2 12/2007 06/2009
A) For each recession, calculate the real wage, that is W/P, for the beginning and ending date of
the recession. For each recession, what is the percentage change in the real wage from the first
month to the last month?
B) The period of 01/1997 12/2000 is usually called the New Economy that describes the
excellent performance of the US economy. Calculate the real wage for the first and last month of
this period. Then calculate the percentage change in the real wage during the period.
C) Click on this link for number of employees (call it N) in the US economy. In the link, you see
a graph. Just above the graph if you click on Download Data in Graph you can download the
data in excel format. Now, calculate the percentage change in N for the period 12/2007
06/2009 and for the period 01/1997 12/2000. Compare your results.
1If you are interested you can have access to a huge data set in Federal Reserve Economic Data (FRED) by this
website.
2If you are interested you can look at this link of National Bureau of Economic Research (NBER) for US Business
Cycle Expansions and Contractions.
2. We want to study how one can measure the annual economic growth rate for a country. You
will need the following links for answering this question: Nominal GDP (call it X) and Inflation
(calculated according to GDP Deflator) (call it P).
Let us also call the real GDP as variable Y. That is . Then, remember from the class that by an
approximation, we have:
We would like to use this approximation since we do not have a direct access to price levels. For
each country, note that is the economics growth rate, that is, the percentage change in the real
GDP from one year to the next year. Also note that is simply the inflation. From the links above
find , and (You need to find the inflation rate in year 2010). Then calculate and for each country
in the table.
China
United
Kingdom
Nigeria
France
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