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29. Which of the following is not included in GDP? carrots grown in your garden and eaten by your family C. carrots purchased at a farmer's market and caten by your family carrots purchased at a grocery store and eaten by your family d. More than one of the above is not included in GDP. Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person? It more than doubled. b. It increased, but it less than doubled. c. It was unchanged. d. It decreased. 31. Yves is an unpaid worker in his family's bakery. The Bureau of Labor Statistics counts Yves as a. unemployed and in the labor force. b. unemployed and not in the labor force. C. employed and in the labor force. d. employed and not in the labor force. Figure 7-14 Supply Demand 32. Refer to Figure 7-14. Which arca represents consumer surplus when the price is PI? a. A b. B C. C 33. The Bureau of Labor Statistics reported in 2005 that there were 28.19 million people over age 25 who had no high school degree or its equivalent, 11.73 million of whom were employed and 1.04 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group? a. 41.6% and 3.7% b. 41.6% and 8.1%Consider a twoperiod model of a small open economy with a single good each period and no investment. Let preferences of the representative household be described by the utility function U{C1, C2} = p C1 + [5 p C2 The parameter [3 is known as the subjective discount factor. It measures the consumer's degree of impatience in the sense that the smaller is B, the higher is the weight the consumer assigns to preserrt consumption relative to future consumption. Assume that B = U11. The representative household has initial net foreign wealth of {1 + rlt I] = 1, with r = [1.1, and is endowed with Ell = 5 units of goods in period 1 and 02 = ID units in period 2. The world interest rate paid on assets held from period lto period 2, r * , equals 16% {i.e., r * = [1.1] and there is free international capital mobility. 1. Calculate the equilibrium levels of consumption in period 1, C1, consumption in period 2, C2, the trade balance in period 1, T El, and the current accourrt balance in period 1, CA1. 2. Suppose now that the government imposes capital corrtrols that require that the country's net foreign asset position atthe end of period 1 be nonnegative {3* 1 a D}. Compute the equilibrium value of the domestic interest rate, r1, consumption in periods 1 and 2, and the trade and currerrt account balances in period 1. 3. Evaluate the effect of capital corrtrols on welfare. Specically, nd the level of utility under capital controls and compare it to the level of utility obtained under free capital mobility. 4. Forthis question and the next, suppose that the country experiences a temporary increase in the endowment of period 1 to El = '3, with period 2 endowment unchanged. Calculate the effect of this output shod: on C1, C2, T Bl, CA1, and r1 in the case that capital is freely mobile across courrtries. 2. Given a market for some good: characterized by the following equations of supply and demand below. TWhat are the economic eects of a $5 per unit tax levied on consumers? Illustrate with a diagram. Show work. P = so 2Qd (1) P P = 20 + 3o. (2) Original Price Original Output New Price Consumer E5135 Hm Output New Price Producer Receives Burden to consumer Burden to producer Tax Revenue
