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It is preferred that these answers are typed. Make sure to answer these questions throughly and explain your answers

ECON 405 Intermediate Macroeconomics
Instr. Rich MacDonald
January 21, 2021
ASSIGNMENT 1
NOTE: This assignment is due by 11 am on January 26, 2021. You may post it to D2L or hand it to me
before class. In an emergency, you may also email it to me. Any graphics you need to include in your
assignment can be scanned in or you may use photos if needed. I will let you be creative in figuring this
out. It is preferred that answers are typed, but if you need to hand write your answers, I will accept this
also. There may be times that you will need to hand draw graphs. YOU ARE EXPECTED TO COMPLETE
THIS ASSIGNMENT ON YOUR OWN USING WHAT YOU HAVE LEARNED IN CLASS. Please let me know if
you have any questions or concerns, but DO NOT WAIT UNTIL THE LAST MINUTE TO CONTACT ME.
1. Use nominal GDP data to compute the share of consumption, investment, government
purchases and net exports in overall output for each of the following quarters: 2019:III,
2019: IV, 2020:I, and 2020:II, 2020:III. For example, since nominal GDP was \$21,170.3
billion in 2020:III and consumption expenditures were \$14,401.5 billion in 2020:III, the
consumption share of GDP was 68.0% (calculated as {\$14,401.5/\$21,170.3}Ã¯Æ’â€”100) in
2020:III. Do you observe any changes that have occurred in these shares since the onset
of COVID-19? (This question is worth 6 points)
2. Use CPI data to report the year-over-year all-items inflation rate in December 2020.
Demonstrate how you can calculate this inflation rate by using CPI index values. (This
question is worth 2 points)
3. What is wrong (if anything) with each of the following statements? (each item is worth 1
point; 7 points total)
a. Ã¢â‚¬Å“Nominal GDP in the US is expressed in chained dollars.Ã¢â‚¬Â
b. Ã¢â‚¬Å“The current US recession began in May 2020.Ã¢â‚¬Â
c. Ã¢â‚¬Å“The core CPI is calculated by subtracting energy and housing prices from the allitems CPI.Ã¢â‚¬Â
d. Ã¢â‚¬Å“When exports are greater than imports, the US runs a trade deficit, which is a
negative entry in the GDP calculation.Ã¢â‚¬Â
e. Ã¢â‚¬Å“GDP in last yearÃ¢â‚¬â„¢s third quarter increased because transfer payments rose.Ã¢â‚¬Â
f. Ã¢â‚¬Å“Economic expansions in the US tend to be shorter than recessions.Ã¢â‚¬Â
g. Ã¢â‚¬Å“The largest component of consumption expenditures is durable goods.Ã¢â‚¬Â
ASSIGNMENT 1
NOTE: This assignment is due by 11 am on January 26. Any graphics you need to include in your
assignment can be scanned in or you may use photos if needed. I will let you be creative in figuring this
out. It is preferred that answers are typed, but if you need to hand write your answers, I will accept this
also. There may be times that you will need to hand draw graphs. YOU ARE EXPECTED TO COMPLETE
THIS ASSIGNMENT ON YOUR OWN USING WHAT YOU HAVE LEARNED IN CLASS. Please let me know if
you have any questions or concerns, but DO NOT WAIT UNTIL THE LAST MINUTE TO CONTACT ME.
1. Use nominal GDP data to compute the share of consumption, investment, government
purchases and net exports in overall output for each of the following quarters: 2019:III,
2019: IV, 2020:I, and 2020:II, 2020:III. For example, since nominal GDP was \$21,170.3
billion in 2020:III and consumption expenditures were \$14,401.5 billion in 2020:III, the
consumption share of GDP was 68.0% (calculated as {\$14,401.5/\$21,170.3}Ã¯Æ’â€”100) in
2020:III. Do you observe any changes that have occurred in these shares since the onset
of COVID-19? (This question is worth 6 points)
2. Use CPI data to report the year-over-year all-items inflation rate in December 2020.
Demonstrate how you can calculate this inflation rate by using CPI index values. (This
question is worth 2 points)
3. What is wrong (if anything) with each of the following statements? (each item is worth 1
point; 7 points total)
a. Ã¢â‚¬Å“Nominal GDP in the US is expressed in chained dollars.Ã¢â‚¬Â
b. Ã¢â‚¬Å“The current US recession began in May 2020.Ã¢â‚¬Â
c. Ã¢â‚¬Å“The core CPI is calculated by subtracting energy and housing prices from the allitems CPI.Ã¢â‚¬Â
d. Ã¢â‚¬Å“When exports are greater than imports, the US runs a trade deficit, which is a
negative entry in the GDP calculation.Ã¢â‚¬Â
e. Ã¢â‚¬Å“GDP in last yearÃ¢â‚¬â„¢s third quarter increased because transfer payments rose.Ã¢â‚¬Â
f. Ã¢â‚¬Å“Economic expansions in the US tend to be shorter than recessions.Ã¢â‚¬Â
g. Ã¢â‚¬Å“The largest component of consumption expenditures is durable goods.Ã¢â‚¬Â

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