Macroeconomics Problem Set 1: GDP, Economic Well-being, and Inflation, Diapositivas de Introducción a la Macroeconomía

¡Descarga Macroeconomics Problem Set 1: GDP, Economic Well-being, and Inflation y más Diapositivas en PDF de Introducción a la Macroeconomía solo en Docsity! Universitat Pompeu Fabra Introduction to Macroeconomics 2019-20 Instructor: Problem set 1 You can find in your Aula global the readings needed 1. Using the information from the Bank of England alluding to GDP, and the highlighted paragraphs from The Economist´s article about GDP, answer the following: 1a. Mention three cases showing that the GDP is a limited measure of standard of living, think also about a situation where an increase in GDP does not make a country better off (it does not improve wellbeing) 1b. With the information from the Bank of England, mention and explain briefly different measures of economic well being 1c. In The Economist, we can read that nowadays GDP does not capture an important proportion of production, innovation or improvements in quality. Explain 1d. In that article we can read: …” Paul Samuelson joked that GDP falls when a man marries his maid”. Explain 1c. In the same reading they talk about hedonic prices, explain the concept and how could the use of those prices improve the measurement of GDP? 2.Watch now this video, and answer: 2a. Describe the evidence on the link between per-capita GDP and happiness. Think about it for the case of: - Domestic economies (here “people”) - Businesses 2b. Detail and explain some effects derived from a fall in GDP 3. The following statements are false. Explain why. a/ Deflation means a decrease in the inflation rate b/ In an economy you cannot simultaneously observe an increase in the price level and a decrease in the inflation rate (both calculated using the CPI – Consumer Price Index). Propose a numerical example to illustrate your answer. c/ If nominal economic growth in a mature and developed economy is 10% we can affirm these are good news since it implies a generous increase in production and its expected net creation of jobs. Give an example, of one economy producing one good, showing why this may be wrong. d/ A higher Inflation derived from HCPI against GDP deflator could be explained by a decrease in the price of imported consumption goods.