ECN 204 Study Guide - Final Guide: Fiscal Multiplier, Market Basket, Money Supply
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In recent years, the BRIC (Brazil, Russia, India and China) countries have received much attention due to their growing importance in the world economy. Now that you are equipped with knowledge about macroeconomic data, you can take a first-hand look at how quickly these countries have been growing, how much inflation they have, and how developed they are when compared to the USA.
Brazil | Russia | India | China | USA | |
Nominal GDP in 2013 (local currency, Million) | 4,844,815 | 66,755,300 | 113,550,735 | 56,884,521 | 16,768,100 |
Nominal GDP in 2000 (local currency, Million) | 1,179,482 | 7,305,600 | 21,774,127 | 9,921,455 | 10,284,800 |
Price Level in 2013 (index 2010=100) | 124.12 | 121.63 | 132 | 111.1 | 106.8 |
Price Level in 2000 (index 2010=100) | 51.4 | 30.75 | 54.2 | 81 | 79 |
Population in 2013 (in Million) | 200.4 | 143.5 | 1,252 | 1,357 | 316.1 |
Population in 2000 (in Million) | 174.5 | 146.6 | 1,042 | 1,263 | 282.2 |
Dollar/Local Currency Exchange rate 2013 | 1/2.4 | 1/32.6 | 1/62.18 | 1/6.07 | 1 |
PPP Conversion Factor 2013 | 1/1.9 | 1/19.47 | 1/18.24 | 1/3.36 | 1 |
The PPP conversion factor is the price in US dollars of a basket of goods (chosen by the World Bank) in the USA divided by the price in local currency of a comparable basket in that country.
For each of the BRIC countries and the US, over the period 2000-2013, answer the following:
1.What was the average annual inflation rate?
2.What was the average annual growth rate of population?
3.What was the average annual growth rate of real GDP?
4.What was the average annual growth rate of real GDP per capita?
5.For each of the BRIC countries, in the year 2013, how did real income per capita compare to that in the US? (To make this comparison, report real GDP per capita for each country as a percentage of the US.) Report two answers, one based on market exchange rates and one adjusted for differences in purchasing power.
1. Provide the formula for the expenditure approach to GDP accounting and include an example of each category of spending.
2. Suppose a consumer buys 10 units of good X and 20 units of good Y every year. The following table lists the prices of goods X and Y in the years 2005-2007. Assume that these two goods constitute the typical market basket. Calculate the price indices for these years with 2005 as the base year. Comment on the inflation picture for these years.
Year |
Good X |
Good Y |
2005 |
$3 |
$6 |
2006 |
4 |
7 |
2007 |
4.5 |
7.5 |
3. Using the expenditure approach, calculate GDP using the following data.
Item |
Amount in dollars (billions) |
Consumption |
7,600 |
Consumption of Durable Goods |
1,600 |
Consumption of Non Durable Goods |
2,800 |
Consumption of Services |
3,200 |
Investment |
2,750 |
Fixed Investment |
1,000 |
Government purchases of Goods & Services |
1,675 |
Government Transfer Payments |
450 |
Exports |
750 |
Imports |
1,600 |
GDP Equals |
4. a. What is the importance of measuring per capita GDP?
b. Why nominal GDP can be misleading?