1. "India to be Home to 437,000 Millionaires by 2018: India, with the world's largest population of poor people, is creating millionaires at a rapid pace and by 2018 is projected to have 437,000 millionaires measured in U.S. dollars. That is 1 millionaire for about 1,600 people living on less than $2 a day." Source: The Times of India, July 8, 2015 a. Why might real GDP per person misrepresent the standard of living of the average Indian? b. Why might $2 a day underestimate the standard of living of the poorest Indians? 2. The accompanying table shows data from the World Bank, World Development Indicators for real GDP per capita (2010 U.S. dollars) for Argentina, Ghana, South Korea, and the United States in 1960 and 2015. Complete the table. Have these countries converged economically? 1960 2015 Real GDP per Percentage of Real GDP per Percentage of U.S. capita (2010 U.S. real GDP capita (2010 real GDP per capita dollars) per capita dollars) Argentina $5,853 ? $12,128 Ghana 1,053 1,696 South Korea 1,103 25,023 United States 17,037 51,4863. In general, how do changes in the unemployment rate vary with changes in real GDP? After several quarters of a severe recession, explain why we might observe a decrease in the official unemployment rate. Explain why we could see an increase in the official unemployment rate after several quarters of a strong expansion. 4. The consumer price index, or CPI, measures the cost of living for a typical urban househaold by multiplying the price for each category of expenditure (housing, food, and so on) timas a measure of the importance of that expenditure in the average consumer's market basket and summing over all categories. However, using data from the consumer price index, we can see that changes in the cost of living for different types of consumers can vary a great deal. Let's compare the cost of living for a hypothetical retired person and a hypothetical college student. Let's assume that the market basket of a retired person is allocated in the following way: 10% on housing, 15% on food, 5% on transportation, 60% on medical care, 0% on education, and 10% on recreation. The college student's market basket is allocated as follows: 5% on housing, 15% on food, 20% on transportation, 0% on medical care, 40% on education, and 20% on recreation. The accompanying table shows the May 2016 CPI for each of the relevant categories. CPI May 2016 Housing 2423 Food 248.0 Transportation 194.6 Medical care 4605 2155 172 Calculate the overall CPI for the retired person and for the college student. The CPI for all items in May 2016 was 239.4. How do your calculations for a CPI for the retired person and the college student compars to the overall CPI