CHAPTER 8
1. Suppose an economys real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP? Assume that population is 100 in year 1 and 102 in year 2. What is the growth rate of real GDP per capita?
2. What annual growth rate is needed for a country to double its output in 7 years? In 35 years? In 70 years? In 140 years?
3. The per-unit cost of an item is its average total cost (= total cost/quantity). Suppose that a new cell phone application costs $100,000 to develop and only $0.50 per unit to deliver to each cell phone customer. What will be the per-unit cost of the application if it sells 100 units? 1,000 units? 1 million units?
CHAPTER 9
1. What are the four phases of the business cycle? How long do business cycles last? Why does the business cycle affect output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing consumer nondurables?
2. How, in general, can a financial crisis lead to a recession? How, in general, can a major new invention lead to an expansion?
3. How is the labor force defined and who measures it? How is the unemployment rate calculated? Does an increase in the unemployment rate necessarily mean a decline in the size of the labor force? Why is a positive unemployment rateone more than zero percentfully compatible with full employment?
4. How, in general, do unemployment rates vary by race and ethnicity, gender, occupation, and education? Why does the average length of time people are unemployed rise during a recession?
5. Why is it difficult to distinguish among frictional, structural, and cyclical unemployment? Why is unemployment an economic problem? What are the consequences of a negative GDP gap? What are the noneconomic effects of unemployment?
