08 Jun uestion Econ 214 Problem Set 1 SOLUTION :
uestion
Econ 214
Problem Set 1
SOLUTION :
1.
CPI of 2010 = 218.1
Equivalent value for 2010
= Original value * CPI of 2010 / CPI of original year.
Movie, Box office receipts (m$), Year, CPI : 2010 equiv. value.
Star Wars 461 1977 60.5 : 461*218.1/60.5 = 1661.89 million $ .
ET 399.9 1982 96.5 : 399.9*218.1/96.5 = 903.82 million $ .
Extra Terrestrial
Titanic 600.8 1997 160.5 : 600.8*218.1/160.5 = 816.41 million $ .
Avatar 760.50 2009 214.5 : 760.50*218.1/214.5 = 773.26 million $ .
Shrek2 437.2 2004 188.9 : 437.2*218.1/188.9 = 504.78 million $.
2.
a. unemployed.
b. unemployed.
c. unemployed.
d. not in the labor force.
e. employed.
f. unemployed.
3.
Labor force participation rate = Labor force/ Working age population,
= 7300/15000
= 0.4867 = 48.67% (ANSWER).
Unemployment rate= Unemployed/Labor force,
= (Labor force – employed)/Labor force,
= (7300-5000)/7300 ,
= 0.3151 = 31.51% (ANSWER).
The employment -population ratio = Employed/working age population,
= 5000/15000 ,
= 0.3333 = 33.33% (ANSWER).
4.
a.
GDP quantity = 5400 (the equilibrium point of AD and SRAS at P= 105)
b.
Yes it is long-run equilibrium level GDP because the LRAS curve is vertical and passes through the intersection point of AD and SRAS.curves.
c.
The actual unemployment rate will be equal to natural rate since the equilibrium is at long-run as well.
d.
The current GDP will sustain in the future also as it is long-run equilibrium level.
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