Economic Exam make sure to explain well your answers. Q3: Comiland is a country

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Economic Exam

make sure to explain well your answers.

Q3:

Comiland is a country that I made up while thinking about this question. Imagine that there are 2,000 people who live in this country, 200 of which are unemployed and 1300 of which are employed. The CPI for this country was 115% in 2005 and 125% in 2007. Real GDP of comiland in 2010 was $120 million and Real GDP in 2011 was $121 million. What is the labor force in comiland? Show your work! What is the unemployment rate of Comiland? Show your work! Calculate inflation rate in comiland from 2005 to 2007. Show your work! Assume that college tuition in comiland was $1000 per semester in 2005. In 2007, the tuition increased to $1100. Taking into account inflation, who paid more for tuition, students in 2005 or students in 2007? Explain. Calculate real GDP growth for comiland from 2010 to 2011. Show your work! Assuming that the population did not changed in the past 20 years for comiland, calculate its GDP per capita for 2011. Show your workl

Explanation / Answer

1. Labor Force = Number of Employed + Number of Unemployed

= 1300 + 200

= 1500

2. Unemployment Rate = (Number of Unemployed/Labor Force) x 100

= (200/1500) x 100

= 13.33 %

3. Expansion Rate = [ ( CPI 2007 - CPI 2005 )/CPI 2005 ]x 100

= [ (125 - 115)/115] x 100

= 8.69 %

4. Genuine College Tuition Fees2005 = Nominal College Fees2005/CPI2005

= $ 1000/115 %

= $ 1000/1.15

= $ 869.565

Genuine College Tuition Fees2007 = Nominal College Fees2007/CPI2007

= $ 1100/125 %

= $ 1100/1.25

= $ 880

Subsequently, the understudies in 2007 paid a greater amount of Nominal College Fees contrasted with 2005. Since ,

the genuine school tution expenses of 2005 = $869.56 < the genuine school tution charges of 2007 = $880

e. Genuine GDP Growth Rate =[ [ Real GDP 2011 - Real GDP 2010 ]/Real GDP 2010 ] x 100

= [ $121 million - $ 120 million ]/$ 120 million ] x 100

= [ $ 1 million/$ 120 million] x 100

= 0.8264 %

f. Gross domestic product per capita2011 = Real GDP2011/Total Population

= $ 121 million/2000

= $ 60, 500

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