E 202 Homework 1 (INTRODUCTION TO MACROECONOMICS)

INTRODUCTION TO MACROECONOMICSHOMEWORK # 118 points possibleNAME ______________________________1. Consider the following numbers:Consumption 2500 Government Spending 600Imports 1300 Exports 1200Inventory Investment -300 Fixed Investment* 700Depreciation 200 Taxes 700* Fixed investment is residential fixed investment plus non-residential fixed investment. Gross investment is fixedinvestment plus inventory investmentCalculatea. GDP _____________b. Net Exports _____________c. Final Sales _____________d. Net Investment _____________2. A household has income of $50,000, spends $30,000 and pays taxes of$15,000. What is the household’s level of saving? _________________3. Suppose that nominal GDP in 1990 was $4 trillion and real GDP was $5trillion. What was the GDP price deflator in 1990? _________________4. Given that prices generally rise over time, do the figures in 3 suggest that1990 comes AFTER the base year or BEFORE the base year? _________________5. If real GDP is $6,000,000 and the population is 250, what is per capita GDP?_________________6. In 2005, I had a new home built at a cost of $150,000. This home provided services worth $10,000 in 2006.In which categories of the national income accounts should this home appear? The choices are consumption,fixed investment, inventory investment, government spending, and net exports.2005: $ ___________ in _____________________________________ (amount) (category)2006: $ ___________ in _____________________________________ (amount) (category)7. On December 28th, 2005, IBM produced a personal computer at a cost of $2,000. On January 3rd, 2006,the computer was sold to the Indianapolis Police Department for $2,000. Describe how this computer shouldshow up in the national income accounts. Use the categories from the prior question______: $_______ in _______________________________________(year) (amount) (category)______: $_______ in _______________________________________(year) (amount) (category)______: $_______ in _______________________________________(year) (amount) (category)What is the contribution of the computer to 2005 GDP? ______________What is the contribution of the computer to 2006 GDP? ______________8. On January 10th, 2006, the U.S. Department of the Treasury purchased a German-made armored car for$75,000. Describe how this transaction should show up in the national income accounts. Use the categoriesfrom the prior question2006: $ ___________ in _____________________________________ (amount) (category)2006: $ ___________ in _____________________________________ (amount) (category)What is the contribution of the armored car to 2006 GDP? ______________