Macroeconomics Case Assignment Essay

gross domestic productQuestions1. Assume that consumer spend is $1,000, goernment expenditures atomic number 18 $300, investments by industry are $150, and the excess of exports over moments is $200. Compute the GDP. (Please essay your work) The basic formula for calculating the GDP is Y = C + I + E + G C= m I=150 E=200 and G=300Y=1000+150+200+300=1650, Y=16502. If we are subject to cast up our domestic energy production, and that allows us to import less oil from hostile countries, briefly explain what will happen to the GDP. If Exports exceeds imports then it will hang on to the GDP exactly if imports are more than the exports it subtracts from the GDP. With this being said if we import less oil from foreign countries then it would positively impact the tribes GDP. ostentationQuestions1. If the CPI went from 100 to 104 during the by year, the rate of pretension, in percent, was? (Please show your work) set place of inflation = (104 100)/100 x 100= 4/100 x 100 = 4%2. If the CPI went from 231 to 234 over the past year, the rate of inflation was? (Please show your work) Rate of inflation = (234 231)/231 x 100, = 3/231 x 100, = 1.30% Unemployment rateQuestions1. Assume the entire noncombatant labor crusade is 20,000 people and the number of jobless is 2,000 people. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate= 2000/20000 = 0.1 *100 = 10Unemployment Rate=10%2. Assume the entire civilian labor force is 20,000 people, the number of unemployed is 2,000 people but, 500 of the unemployed have now stopped looking for work. Compute the unemployment rate, in percent. (Please show your work) Unemployment Rate=1500/19500= 0.078Unemployment Rate= 7.8%International Economic Trends1. Compare the 4 countries in terms of Output and Growth (Real GDP). The abstract should barely cover the arrest from the beginning of 2008 to the present, and make certain the to the highest degree recent 2011 changes are addressed. Th e 2008 frugal contraction affected the world miserliness. 2008 seen the housing food market crash both(prenominal) here and in japan. By 2009, Canada, Japan, the United Kingdom, and the United States all maxim negative economic ontogeny. Japans economy was slay the hardest with -10% development in 2009 as demand for their products weakened. Canada was the last to fall into negative growth and see the least negative growth of the four countries. All see a partial recovery in 2010 as GDP came out of negative growth and each seen minimal growth.The global economic crisis, however, hit the estates mainstay exports hard and brought on Japans worst recession since World War II, in late 2008. Since mid-2009, Japan has limped back into recovery, helped by exports and stronger capital investment. 2011 was looking up for the Japanese economy, comparatively speaking, but the earthquake and tsunami in early March 2011 has put the economy in a tailspin with a large portion of the count ry affected not only by the devastation but the effects of the nuclear power plan leakage. Canada, the UK, and the U.S. appear to be going into the prototype dip recession as the economies in 2010 were making slow recovery, 2011 has seen more contraction. The monetary policies of all four countries have slowed the pace of the recession, but are going to be unable to fix the problems, because the national debt are so high, deficit are rising, and projections are not good. Monetary policy, keeping amuse rank low and printing more money can only do so much fiscal policies implementing stimulus packages have predictable failed and only added to national debts.2. Compare the four countries with respect to swelling and damages (CPI). The analysis should only cover the period from the beginning of 2008 to the present, and make sure the close to recent 2011 changes are addressed. As the economies of Japan, Canada, the UK, and the U.S. were entering the recession in 2008, prices and inflation had hit a high, but began to fall as the GDP throw off. GDP and CPI are nearly identical images when looking at the graphs of each. Prices fell as the economy tanked because consumers clearly did not have the purchase power. As the economies of each country experienced positive growth rates, CPI began to rise. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. When comparing the four countries, Canada, UK and U.S. have experienced very similar changes in CPI, where Japan has remained relatively unchanged for 2011, but mimicked the others in 2008 and 2009.Inflation for 2011 in Canada, the UK and the U.S. is increasing. Some reports say groundnut butter will see a 40% price enlarge in the next week, which may be due to a poor peanut growing season. According to the United States Department of Agricultures Consumer Price Index, all food increased 0.8 percent between 2009 and 2010 and is forecast to increase 3.5 to 4.5 percent in 2011. The increases in food prices affect the overall purchasing power of consumers, combined with inflation, consumers are not going to be able to purchase our way out of recession. 3. Compare the four countries regarding the Labor trade (Unemployment Rate).The analysis should only cover the period from the beginning of 2008 to the present, and make sure the most recent 2011 changes are addressed. Regarding the labor market, United States posted the most consistent rates of unemployment ranging from 1.9% to just near 3%. In staring(a) contrast, Japan posted the most unpredictable figures in terms of unemployment percentages 0.8% in 2008 to -9.8% in 2009.In 2011, Japan recorded a percentage change of about 2.0%. As is the case with the USA, UKs rates never went below 1% during this period. The future of the labor market is therefore quite promising in the USA as compared to the other countries in this particular category.Questions1. Assume stakes rates on Treasury bo nds, with the indicated time to maturities as follows15 long time = 7.72%20 years = 8.72%25 years = 9.64%30 years = 10.18%The differences in rates among these bonds is caused by (please briefly explain your choice)a. Tax effectsb. failure hazard allowances. (Default risk premium will cause the interest rates among the T bond with different time period with different rates) c. matureness risk premiumsd. A down sloping yield bend dextere. runniness risk premiums2. Which statement is False? (Please briefly explain your choice) a. The default risk premium is applied to all bonds including U.S. governing body ones. b. The liquidity premium requires that an summation can be sold both quickly and for fair market nurture. c. The inflation premium is added on to the required return to protect the purchasing power of an investors earnings. d. The market risk premium is added to all bonds, even U.S. Government ones. (Market risk premium will be the same for all investors since the val ue is based on what actually happened).3. Over the next 3 years inflation is expected to be Year one 2.5%, year cardinal 3.5%, year three 4%. What should investors require for an inflation premium on a Treasury bond with a three-year due date? (Please show your work) Inflation premium on year 3 = (2.5+3.5+4)/3Inflation premium on year 3 = (10)/3Inflation premium on year 3 = 3.33%4 If the rate of inflation is expected to be 0% for the next 4 years will the yield curve have an upward slope? (Please briefly explain your answer) Yield to maturity = = Rf + DRP + LP + MRP + Inflation Premium Everything consistentInflation premium = (2.5+3.5+4+0)/4 = 2.5 it reduces the 3.33 to 2.50 No it wont be upward it will be downward sloping if the rate is 0 in year fourReferencehttp//www.investopedia.com/terms/m/marketriskpremium.aspaxzz1uEeDH1nd http//www.cliffsnotes.com/study_guide/Unemployment-Rate.topicArticleId-9789,articleId-9735.html http//inflationdata.com/inflation/inflation_articles/calcu lateinflation.asp http//www.investopedia.com/terms/i/inflation.aspaxzz1lAEXt7uC http//research.stlouisfed