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valleyval2001

Problem Set 1

Complete all questions listed below. Clearly label your answers.

1.      The receipts and year of release of the five movies with the largest nominal box office revenues, along with the CPI data of each year are presented below. Assuming that the receipts for each of the movies were derived during their year of release, convert the receipts for each to real dollars for the year 2010 (2010 CPI 218.1).Put the movies in order from largest to smallest real box office receipts.

 Movies NominalBox Office Receipts (millions) Year Released CPI in Year Released. Avatar \$760.50 2009 214.5 Titanic 600.8 1997 160.5 Star Wars 461 1977 60.5 Shrek 2 437.2 2004 188.9 E.T. The Extra-Terrestrial 399.9 1982 96.5

3.   Use the following data to calculate (a) the labor force participation rate, (b) the unemployment rate, and (c) the employment/population ratio.

 Population age 16 and over 15,000 Labor force 7,300 Not currently working 4,500 Employed Full-time 5,000 Employed Part-time 1,100 Unemployed. 1,200

4.   Consider an economy with the following aggregate demand (AD) and short-run aggregate supply (SRAS) schedules. Decision-makers have previously made decisions anticipating that the price level during the current period will be P105.

a.       Indicate the quantity of GDP that will be produced during the period.

b.      Is it a long-run equilibrium level of GDP? Why or why not?

c.       How will the unemployment rate during the current period compare with the natural rate of             unemployment?

d.      Will the current rate of GDP be sustainable into the future? Why or why not?

 AD105 Price Level SRAS 105 6300 90 4500 6000 95 4800 5700 100 5100 5400 105 5400 5100 110 5700 4800 115 6000

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