Download ECO 230 Quiz: Calculating & Comparing GDP, Inflation, Unemployment, & Interest Rates and more Assignments Introduction to Macroeconomics in PDF only on Docsity! ECO 230 Homework quiz – Bonus- I will add 3% on your total (course) grade if you get them all correct. Summer, 2002 Dr. Hassan Note: Download all of the necessary (at least 25-yeat historical) data from http://www.bls.gov/ http://www.bea.doc.gov/ http://www.stls.frb.org/ http://www.stls.frb.org/fred/data/cpi/cpiaucsl http://stats.bls.gov/cpi/home.htm or any other source and perform the following. 1. (15 points) Calculate nominal GDP (total) using the expenditure approach and compare your values with the one provided in the same web site. Do this by just plotting the two numbers. 2. (20 points) a. Calculate real GDP using both the CPI and the GDP price deflator. Plot real GDP (calculated using the CPI and the deflator) and Nominal GDP on the same graph. Then briefly explain the similarities and differences between the two real GDP measures. Which of the two is higher (lower) and why? Why has the nominal GDP increased faster than real GDP? What would it mean if an economy had real GDP increasing faster than nominal GDP? 3. (20 points) a. Plot both the GDP deflator and the CPI on the same graph. Then explain the similarities and/or differences between them (both conceptually as discussed in class, and by looking at the graphs). b. Calculate the inflation rate using both the CPI and the deflator and graph both of them using the same axis. Do you see any similarities and differences between them? Explain briefly. c. Calculate the growth rate of real and nominal GDP. What are the similarities and differences between the two? Which measure would you like to use and why? 4. (15 points) a. Graph the Unemployment rate and briefly evaluate the graph. b. Plot the unemployment and the inflation rate (calculated using the CPI) on the same graph. What is the relationship between the two "misery indexes" over time? 5. (30 points) On Inflation, unemployment, and Interest Rates: a. (5 points) Find and download a long-term interest rate such as the 10-year bond rate. This is your nominal interest rate. Calculate the real interest rate as shown in class and/or using the notes Use the CPI for inflation rates). Plot the inflation and the real interest rates on the same graph and comment. Do they go together or do you think there may be a trade-off between the two misery indexes? [Note: use the simple (approximation) formula I showed in class to calculate the real interest rate!} b. (15 points) Suppose you are the lender and I am the borrower. I borrowed $1000.00 from you at an interest rate of 10%. The current inflation rate is 3%. The actual