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Given Change in Economic Real GDP Price Level Factor Depreciation of American dollar (1) (2) Increase in wage rates Decrease (3) Beneficial supply shock Increase Decrease Decrease in government (4) (5) purchases Increase in personal income (6) Decrease taxes Decrease in labor productivity (7) (8) 1. Based on the given economic factor condition, fill in the missing blanks with the corresponding effects to Real GDP and the Price Level. (identify "decrease" or "increase") 2. Explain the graphical representation for any 2 of the conditions listed above (except beneficial supply shock) and be sure to represent the effects to Real GDP and the Price Level based on the changing economic factor. Mike earns $60,000 in Year 1. He receives a raise in Year 2 where he earns $63,000. The CPI in Year 1 is 122 and the CPI in Year 2 is 132. a) What is the inflation rate between the two years? b) The nominal value in Year 2 was $63,000 but what is its real value? c) By what percentage has Mike's salary increased from Year 1 to Year 2? d) Has the increase in salary kept up with inflation, exceeded inflation, or been below inflation? e) Explain your answer in Part (d). Are you happy? Why or why not? 40

Given Change in Economic Real GDP Price Level Factor Depreciation of American dollar (1) (2) Increase in wage rates Decrease (3) Beneficial supply shock Increase Decrease Decrease in government (4) (5) purchases Increase in personal income (6) Decrease taxes Decrease in labor productivity (7) (8) 1. Based on the given economic factor condition, fill in the missing blanks with the corresponding effects to Real GDP and the Price Level. (identify "decrease" or "increase") 2. Explain the graphical representation for any 2 of the conditions listed above (except beneficial supply shock) and be sure to represent the effects to Real GDP and the Price Level based on the changing economic factor. Mike earns $60,000 in Year 1. He receives a raise in Year 2 where he earns $63,000. The CPI in Year 1 is 122 and the CPI in Year 2 is 132. a) What is the inflation rate between the two years? b) The nominal value in Year 2 was $63,000 but what is its real value? c) By what percentage has Mike's salary increased from Year 1 to Year 2? d) Has the increase in salary kept up with inflation, exceeded inflation, or been below inflation? e) Explain your answer in Part (d). Are you happy? Why or why not? 40

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: The Markets For The Factor Of Production
Section: Chapter Questions
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Given Change in Economic Real GDP Price Level Factor Depreciation of American dollar (1) (2) Increase in wage rates Decrease (3) Beneficial supply shock Increase Decrease Decrease in government (4) (5) purchases Increase in personal income (6) Decrease taxes Decrease in labor productivity (7) (8) 1. Based on the given economic factor condition, fill in the missing blanks with the corresponding effects to Real GDP and the Price Level. (identify "decrease" or "increase") 2. Explain the graphical representation for any 2 of the conditions listed above (except beneficial supply shock) and be sure to represent the effects to Real GDP and the Price Level based on the changing economic factor.
Transcribed Image Text:Given Change in Economic Real GDP Price Level Factor Depreciation of American dollar (1) (2) Increase in wage rates Decrease (3) Beneficial supply shock Increase Decrease Decrease in government (4) (5) purchases Increase in personal income (6) Decrease taxes Decrease in labor productivity (7) (8) 1. Based on the given economic factor condition, fill in the missing blanks with the corresponding effects to Real GDP and the Price Level. (identify "decrease" or "increase") 2. Explain the graphical representation for any 2 of the conditions listed above (except beneficial supply shock) and be sure to represent the effects to Real GDP and the Price Level based on the changing economic factor.
Mike earns $60,000 in Year 1. He receives a raise in Year 2 where he earns $63,000. The CPI in Year 1 is 122 and the CPI in Year 2 is 132. a) What is the inflation rate between the two years? b) The nominal value in Year 2 was $63,000 but what is its real value? c) By what percentage has Mike's salary increased from Year 1 to Year 2? d) Has the increase in salary kept up with inflation, exceeded inflation, or been below inflation? e) Explain your answer in Part (d). Are you happy? Why or why not? 40
Transcribed Image Text:Mike earns $60,000 in Year 1. He receives a raise in Year 2 where he earns $63,000. The CPI in Year 1 is 122 and the CPI in Year 2 is 132. a) What is the inflation rate between the two years? b) The nominal value in Year 2 was $63,000 but what is its real value? c) By what percentage has Mike's salary increased from Year 1 to Year 2? d) Has the increase in salary kept up with inflation, exceeded inflation, or been below inflation? e) Explain your answer in Part (d). Are you happy? Why or why not? 40
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