Use the table below to answer the following question.
Table 21.3.2
Data from Southton
Price
(dollars)
Price
(dollars)
Quantity
(number)
Quantity
(number)
Item
Base
Current
Base
Current
Rubber Ducks
Beach Towels
1.15
9.10
1.36
10.00
90
15
100
14
1) Refer to Table 21.3.2. From the data in Table 21.3.2. What is Southton’s consumer price index for the current year? What is the rate of inflation over the current year? Show your calculations. (4 Marks)
2) If in Canada the working-age population is 38 million, 18.5 million are employed, 1.5 million are unemployed, and 2 million of the employed are working part-time, half of whom wish to work full-time. Calculate the involuntary part -time rate, employment rate and participation rate (for each calculation, show the formula and your work). (6 Marks)
3) How are the results for the involuntary part-time rate interpreted? (i.e., what do the numbers tell us)? (3 Marks)
4) Canadas real GDP in November 2020was $1,934,643,000 and $1,990.238,000 in November 2019. Canadas population was 37,593,384 in 2019 and 38,005238 in 2020. Complete the questions below, fully showing your calculations. (7 marks)
a) What is the growth rate of real GDP from November 2019 to November 2020?
b) What is the growth rate of real GDP per person?
c) Explain what is happening to the Standard of Living in Canada from November 2019 to November 2020?
Table 20.4.4
Quantities
2013
2014
Bananas
1,000 bunches
1,100 bunches
Coconuts
500 bunches
525 bunches
Prices
2013
2014
Bananas
$2 a bunch
$3 a bunch
Coconuts
$10 a bunch
$8 a bunch
5) Refer to Table 20.4.4 above. The table provides data on the economy of Tropical Republic that produces only bananas and coconuts.
a) Calculate the Nominal GDP in 2013. (2 Marks)
b) Calculate the Real GDP in 2014. (2 Marks)
c) Calculate the GDP Deflator in 2014 (3 Marks)
Use the figure below to answer the following questions.
Figure 26.3.5
6) Refer to Figure 26.3.5 above. What type of gap is shown by point B and how large this the gap in terms of Real GDP? (2 Marks).
7) If in Figure 26.3.5 the economy does not return to full-employment equilibrium at point A, what will happen to the position of SAS and what type of inflation will result? (3 Marks)
8) As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy? (8 Marks)
