Principles of Economics Problem Set 9 - Universidad Carlos III de Madrid, Ejercicios de Sociología Económica

¡Descarga Principles of Economics Problem Set 9 - Universidad Carlos III de Madrid y más Ejercicios en PDF de Sociología Económica solo en Docsity! NEW Universidad Carlos III de Madrid – Department of Economics Principles of Economics - Problem Set 9 Conceptual Questions Write down a short and concise answer. When you are asked to solve the question in class, explain the concept clearly and give examples or pieces of evidence. 1. Why we say that national savings are equal to investment? What assumption is crucial for the statement being true? 2. Why the supply of loanable funds has a positive slope and the demand for loanable funds has a negative slope? 3. What is the difference between the natural rate of unemployment and the rate of unemployment during a recession? 4. Is true that if a person losses her/his job, unemployment rate always increases? 5. Explain why can be the case that some prices increase but the CPI does not increase. 6. Why an increase of 10% in the price of bread will have a larger impact in the CPI than an increase of 10% in the price of salt. Problems 1. In an economy, two goods are produced in: orange juice and sandwiches with the following prices GOODS Orange juice (per liter) Sandwiches 2012 3 2 2013 6 2 2014 6 4 a. Calculate the price index for this economy if the basket is 1 liters of orange juice and 1 sandwich and the base year is 2012. b. Calculate the price index for this economy if the basket is 1 liter of orange juice and 15 sandwiches and the base year is 2012. c. Compare the evolution of the price indexes and explain why they behave differently. 2. Explain what happens to savings, investments and interest rate if 1 a. The government decides to reduce public expenditure (G) but it does not change tax revenues (T) b. What would be the impact of such a measure in the prospective for economic growth in the long run? 3. According to the EPA (Encuesta de Población Activa) in the second quarter of 2018 in Spain there were 22,834.2 thousand active people, 19,344.1 thousand occupied and 3,490.1 thousand unemployed. Activity rate was 58.80%. a. Calculate unemployment rate and population older than 16 b. Recalculate unemployment rate if 1,000 thousand individuals lose their job and become immediately non-active. Other questions 1. Suppose that in a closed economy GDP is 10,500, consumption is 7,500, and taxes are 500. What value of government purchases would make national savings equal to 2,000 and at that value would the government have a deficit or surplus? a. 1,500, deficit b. 1,500, surplus c. 1,000, deficit d. 1,000, surplus 2. If the government currently has a budget deficit, then a. the current level of public debt must be above zero. b. its debt is increasing. c. government expenditures are lower than taxes. d. All of the above are incorrect. 3. If there is a sudden increase in the oil price (not produced in Spain). What will be the behavior of the GDP deflator in relation to the CPI? 4. The inflation rate is defined as the a. price level in an economy. b. change in the price level from one period to the next. c. percentage change in the price level from the previous period. d. price level minus the price level from the previous period. 5. Suppose that the adult population in the town of Springfield is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately a. 29%. b. 18%. c. 24%. 2