I have a few macroeconomic homework questions which I didn't quite get..
1. How would each of the following transactions affect the GDP of Canada?
a) The Canadian government pays $1 billion in salaries for government workers.
b) The Canadian government pays $1 billion to Employment Insurance beneficiaries.
c) The Canadian government pays a Canadian firm $1 billion for constructing an airport.
d) The Canadian government pays $1 billion in interest to holders of Canadian government bonds.
e) The Canadian government pays $1 billion to a U.S. firm for military aircraft
I found out what happens to the GDP but i'm not really sure why it happens:
a) GDP increases
b) No affect on GDP
c) GDP increases
d) No affect on GDP
e) GDP decreases since the Canadian government is paying outside of the country for a good.
I think I got the reason for e, but what are the other reasons?
2. Here are some data for an economy. Find its GDP. Explain your calculations.
Consumption expenditures: $600
Government purchases of goods and services: 200
Construction of new homes and apartments: 100
Sales of existing homes and apartments: 200
Beginning-of-year inventory stocks: 100
End-of-year inventory stocks: 125
Business fixed investment: 100
Government payments to retirees: 100
Household purchases of durable goods: 150
I'm not really sure how to find the GDP. I'm assuming I have to add a bunch of these up. So starting from the top, if consumption expenditures is $600 do I add $600 to GDP? And add 75 from exports on top of that? I'm not sure about many of them. Would imports mean I subtract 50 from the GDP? And isn't Household purchases of durable goods fall under Consumption expenditures?
3. The standard assumption is that the GDP deflator will rise over time and be used to reduce (or deflate) nominal GDP to real GDP of a lower dollar amount. But the implicit chain price index form of the GDP deflator dropped from 100 in the first quarter of 1997 to 99.1 by the fourth quarter of 1998. Nominal GDP increased from $870 billion in the first quarter of 1997 to approximately $928.3 billion in the fourth quarter of 1998. Use the GDP "deflator" to calculate real GDP for the fourth quarter of 1998.
I don't really have any clue how to do this
4. Ellen is downloading labour market data for the most recent month, but her connection is slow and so far this is all she has been able to get:
Unemployment rate: 5.0%
Participation rate: 62.5%
Not in the labour force: 60 million
Find the labour force, the working-age population, the number of employed workers, and the number of unemployed workers for this high-population country.
From my book I know that:
participation rate = labour force / working-age population
However we only know participation rate so we can't find the other 2..
Also from my book:
labour force = employed workers + unemployed workers
We are given none of this info..
And lastly from my book:
unemployment rate = unemployed workers / labour force
All we are given is unemployment rate..
How would I figure the labour force, working-age population, number of employed workers, and number of unemployed workers out?