2. AKR is a small island nation. Its population total is 800, and it has 525 wage earners who earn an average of $220 per year. Each wage earner spends $ 132 dollars per year buying local goods and services and $ 29.00 buying imports. The island exports a total of $1,500 worth of goods. The government tax rate is 15% and all government money is spent on building infrastructure and supporting schools. There is only one industry (Coal Mining) on the island and it employs every wage earner. The industry spends $800 each year on new mining equipment.

A. Calculate the GDP?

B. Calculate GDP per capita?

3. Refer to the figure below. At a domestic income level of $2,000 billion, imports equal?

Domestic Income Exports Net Exports

$ 0 $120 billion $80 billion

$ 500 billion $145 billion $75 billion

$1,000 billion $170 billion $70 billion

$1,500 billion $175 billion $45 billion

$2,000 billion $210 billion $50 billion

Widgets Gizmos Thingamajigs

Year Price Quantity Price Quantity Price Quantity

2006 $ 600 1 $450 3 $375 5

2007 $800 1 $500 5 $400 7

4. Calculate the nominal GDP for

a. 2006

b. 2007

A. Using 2006 as the base year, calculate the real GDP for 2007.

5. A. List the determinants of demand.

B. Explain the difference between a change in the Quantity demanded and a change in demand.

C. List the determinants of supply.

D. Explain the difference between a change in the Quantity supplied and a change in supply.