ECO 221: MACROECONOMICS ASSIGNMENT 1 /Business and Economics Division.

ECO 221: MACROECONOMICS  ASSIGNMENT 1   /Business and Economics Division.

Answers to this assignment are due back by Friday March 17, 2017, in TYPED and HARD copies; promptly at the start of class (late assignments will NOT be accepted).

Make sure to drop an electronic version in the DROPBOX before class on the due date! Please feel free to work together on the assignment in groups of no more than

THREE. Use (shown in class) as your data source.  Note: Any pertinent remarks are very welcome; quality not quantity will determine your grade

on this assignment.
1. Comparing GDPs across countries (20 points)
This has been recently reported that China has surpassed Japan, France, and Germany to become the world’s second largest economy and could very soon overtake the USA

as the world first economy. The goal of this section is to go behind headlines by comparing GDPs across these countries.
a. Graph the GDPs of the above mentioned countries (note: use GDP (constant 2005 US$)). Comment (5 points).
b. GDP, especially in developing countries can be underestimated because the market value of goods and services is generally less as compare their market value in

developed economies. To correct for this, purchasing power parity (PPP) prices are used instead.
Graph the GDPs of the above mentioned countries (note: use GDP, PPP (constant 2011 international $)). Comment and compare with a.) (5 points).
c. Is China catching up with the US? How large is the USA economy relative to the Chinese economy? (Hint: graph the ratios of the US GDP relative the China GPD across

the years. Use a. GDPs figures) Comment! (5 points).
d. Making sense of it all: graph GDP growth (annual %) for the US and China. Comment (5 points).
2. Standard of Living or  ‘Command over Resources’ (10 points)
Despite rapid economic growth China struggles to make in the top countries in term of income per capita. Using GDP per capita (constant 2005 US $), redo a.; b.; c.;

and d. in 1. (NOTE: for c./ , use USA and China ONLY). Comment! (2.5 points each)
3. Price Level: CPI and Inflation (10 points)
For this section, use USA, Brazil and Nigeria.
a. Graph on the CPI of the above mentioned countries [Use: Consumer price index (2005=100)]. Comment! (5 points). b. Graph on the Inflation rate of the above mentioned

countries [Use: Inflation, consumer prices (annual %)]. Comment! (5 points).
4. Employment, Unemployment and GDP (10 points)
a. Select 2 OECD countries (High income developed countries). Graph their unemployment rate (use Unemployment, total (% total labor force). Comment! (5 points)
b. In Chapter 6, we discuss the relationship between level of GDP and the level of employment. That is the higher the level of employment (the lower the level of

unemployment), the higher the GDP. Do the data confirm this? (Hint: Graph the GDP growth rate and the Unemployment rate for ONE of the countries above selected.

Comment! (5 points)

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