CALIFORNIA STATE UNIVERSITY, SACRAMENTO
Department of Economics
Prof. A. R. Gutowsky
Economics 100A
Problem Set 1
Reading Assignment to complement Chapter 1: "Internet Economics: A Thinkers’
Guide"(to be distributed in class).
Access Brad DeLong’s website and access and read the following links:
"Macroeconomics of the New Economy" and "Graph of the Week: Dynamic
Inflation Forecasting"
Access http://www.economics.about.com and access and read the link "Whats New About
the New Economy"
Access www.rfe.org to obtain macro data. Click onto the Bureau of Economic Analysis (BEA)
link and obtain annual data on:
Money GDP (GDP in current dollars)
Real GDP (GDP in constant dollars)
Implicit Price Deflator
Chain-Type Price Index (GDP)
Consumer Price Index for all urban consumers
Labor Force
Unemployed Workers
for the period 1985-1999.
Use EXCEL to calculate the following information:
(1) Use money GDP and the chain type price index to determine real GDP. Graph your answer.
(2) Use money and real GDP to determine the implicit price deflator.
(3) Calculate the rate of growth of real GDP.
(4) Calculate the rate of inflation using both the implicit price deflator and the
consumer price index (CPI). Explain the difference in these two measures of inflation.
Graph your answer.
(5) Calculate the rate of unemployment. Using a graph show the relationship between the
rate of inflation and the unemployment rate.
Questions
(1) What is GDP?
(2) What are the three sides (approaches) to GDP?
(3) What is the difference between a final good and an intermediate good?
(4) What is the difference between real and nominal (money) GDP?
(5) What are the components of the expenditure side?
(6) What are the various measures of income?
(7) What is the difference between the GDP Deflator and a Chain-type price index?
(8) What is the difference between the CPI and the GDP Deflator?
(9) Define the terms: labor force participation rate, labor force, unemployed
(10) Explain the economic meaning of Figure 2-5 on page 36.
(11) What is Okun’s Law?
[Problem Set 1 2 3] [Exercises] [Reading Assignments] [Web Resources]