Intermediate Macroeconomics

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inter macro homework 2 Page 2 of 4
1. Consider an economy that produces apples and laptops. The prices and quantities of these
two goods for 2013 and 2014 are detailed below.
Year Price
of apples
Quantity
of apples
Price
of laptops
Quantity
of laptops
2013 $2 500 $1,000 5
2014 3 550 1,000 6
Find the CPI using the following methods:
1) Laspeyres.
2) Paasche.
3) Fisher.
inter macro homework 2 Page 3 of 4
4) Using the Fisher approach, what is the inflation rate between 2013 and 2014?
2. Suppose the following data: Nominal GDP in 2012 and 2013 are, respectively, $8,000 and
$7,000. The GDP deflator in 2012 and 2013 are, respectively, 132 and 129.
1) What is real GDP in 2012?
2) What is real GDP in 2013?
3) Calculate the growth rate of real GDP between 2012 and 2013.
inter macro homework 2 Page 4 of 4
3. A firm has the following production function for assembling trinkets. Suppose each worker is
paid a wage rate of $16 and that the price of a trinket is $2.
L y MPL pMPL
0 0
1 20
2 35
3 47
4 57
5 65
6 70
1) Fill in the blanks above.
2) How many workers should the firm hire to maximize profit?
3) What is the optimal profit?
4) Suppose that the price of the product remains at $2 but that the wage rate increases to
$21. Find the new profit-maximizing level of labor.
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