CASE STUDY 2 - GDP, INFLATION & UNEMPLOYMENT Read the following handouts containing information from your textbook about the concepts you will apply in this scenario. 1. Background Information - GDP 2. Background Information - Unemployment 3. Background Information - Inflation POINTS AND GRADE This assignment contains 12 questions and a total of 100 points. The specific weight of your final grade is 4%. SCENARIO INTRODUCTION Use the information provided below to complete the questions. Suppose that data in tables 1 & 2 correspond to the small nation of Collegeville. (Table 1) National Income Accounting latest year data [Table 2) Demographics & Market Basket Data Consumption of Durable Goods $800,000 Population 3,200 Consumption of Nondurable Goods $650,000 16 or younger 89 Compensation of Employees $565,000 nstitutionalized 49 Consumption of Services $1,150,000 Without a job but not actively looking 31 Fixed Residential Investment $200,000 Do not have a job, but are actively seeking work 240 Corporate Profits $120,000 Work Part-Time Fixed Nonresidential Investment $600,000 Work Full-Time ,120 Consumption of Fixed Capital $60,500 Cost of Basket 2018 2,340.00 Change in Inventories $300,000 Cost of Basket 2019 2,855.00 Government Purchases of Goods and Services $1,200,000 Cost of Basket 2020 $3,230.00 Exports $300,000 Natural Rate of Unemployment 8% Imports $70,000 CALCULATING GDP 1. According to the information provided in the GDP background information handout, a) what are the 4 categories of the expenditures approach? b) how are these categories used to calculate GDP? (8 points)2. According to table 2 in the GDP background information handout, what are the subcategories of Personal Consumption Expenditures? (8 points) 3. According to table 2 in the GDP background information handout handout, what are the subcategories of Gross Private Domestic Investment? (8 points) 4. Use the data provided in Table 1 and 2 (above), to calculate (show your work) the following macro aggregates: a) Personal Consumption Expenditures, b) Gross Private Domestic Investment, c) Net Exports, d) Government Purchases of Goods and Services, e) GDP using the expenditure approach & f) GDP per Capita. (18 points) CALCULATING INFLATION & UNEMPLOYMENT 5. Collegeville economists have been using 2018 as their base year to calculate inflation. a) What is the CPI during the base year (2018)? b) What is the CPI for 2019? c) What is the CPI for 2020? (12 points) 6. Calculate the rate of inflation for Collegeville between the base year (2018) and 2019? In other words, what was the rate by which prices increased between those years? Round the percentage to one decimal place; that is, 4.36% is 4.4%. (8 points) 7. Calculate the rate of inflation for Collegeville between 2019 and 2020? In other words, what was the rate by which prices increased between those years? Round the percentage to one decimal place; that is, 4.36% is 4.4%. (8 points) B. How many discouraged workers does Collegeville currently have? Is this group considered to be in the Labor Force? Why or why not? (8 points) 9. Calculate the unemployment rate for Collegeville. Round the percentage to one decimal place; that is, 4.36% is 4.4%. (6 points) 10. Once you have calculated the current unemployment rate in Collegeville, what is the corresponding "employment rate". In other words, which proportion of the labor force is considered employed? (6 points) 11. Explain the relationship or connection between the Natural Rate of unemployment and the concept of Full Employment? (6 points) 12. According to the data, is the economy of Collegeville performing at, above or below full employment? Explain. (4 points)INSTRUCTIONS FOR SUBMITTING YOUR RESPONSES Submit your completed Case Study 2 by attaching a MS Word file in this inbox. Type your response on a Microsoft Word file (.doc or .docx file), save it, and upload it through D2L. You MUST submit your response to the appropriate assignment folder by the due date. Work turned in using any format other than Microsoft Word, may not be graded. In addition, work turned in late, via email, in my mailbox or in class WILL receive NO CREDIT. Consideration MAY be given on late assignments for valid documented emergencies. To submit your response, you will need access to the internet, and a computer with proper software, if you don't, you can use any of the "open lab" computers at any BC Learning Resource Center or in public libraries. No consideration will be given for not having access to the hardware, software or any other resource required to access the D2L platform. Once you have completed the Case Study and are ready to submit your MS Word file, click on the title of the assignment as it appears in the D2L Content Section inside of Unit 3 or go to the assignment directly by finding the "Assessments Tab" and selecting "Assignments". Your response will be evaluated in accordance to the following Intellectual Standards; Clarity, Accuracy, Precision, Relevance and Logic. For more information review the assignment rubric. THINGS TO CONSIDER You should only attempt to complete this assignment once you have finished reading, and reviewing (including taking notes) all of the textbook content for chapter 5 and 6. The background handout provided is useful but it should not be your only reading source. An assignment of this nature may require 2 hours of reading, 60 minutes to figure out the right answers and another 10 minutes to compose, edit and submit your MS Word file. You should also be familiar with the Intellectual Standards, which are explained in the 'Start Here" Unit, and also reviewed in part below. The following Intellectual Standards; Clarity, Accuracy, Precision, Relevance and Logic, will be used to grade your response. In other words, your grade will depend on how clear, accurate, precise, relevant and logical your response is. As you write and draft your response, use the questions below to solicit or achieve each standard