Economics 248 Assignment 1 (version B) This assignment has a maximum total of 100 marks and is worth 10 percent of your total grade for this course. You should complete it after completing your course...

Economics 248 Assignment 1 (version B) This assignment has a maximum total of 100 marks and is worth 10 percent of your total grade for this course. You should complete it after completing your course work for Units 1, 2, and 3. Answer each question clearly and concisely XXXXXXXXXXa. Distinguish between a positive and a normative statement. (2 marks) b. Label each of the following news items as a positive or a normative statement. (8 marks) (i) The number of people living in poverty increased over the last decade. (ii) The rural population in Alberta decreased over the past decade. (iii) The rich pay too much for health care. (iv) The federal government should cut corporate tax to attract new businesses to the country XXXXXXXXXXThe CPI for Zippa Republic was 111.9 in December 2007, 114.6 in December 2008, and 116.2 in December XXXXXXXXXXmarks) a. What do these numbers tell you about the price level in these three years? b. Calculate the inflation rates for the years ended December 2008 and December XXXXXXXXXXc. How did the inflation rate change in 2009? d. Why might these CPI numbers be biased? e. How do alternative price indexes help to avoid the bias in the CPI numbers? 3. Identify each of the following as consumption or investment goods or both. Justify your answers. (10 marks) a. the Mackenzie pipeline b. a loaf of bread c. a taxi-cab d. a tennis racquet e. a vacation in a foreign country 4. Base your answers to the questions on this information: In one day, Canada can produce either 200 tonnes of wheat or 90 tonnes of copper ingots. In one day, Chile can produce either 120 tonnes of wheat or 175 tonnes of copper ingots. (10 marks) a. Calculate Canada’s opportunity cost of one tonne of wheat. b. Calculate Chile’s opportunity cost of one tonne of copper ingots. c. Who has a comparative advantage in producing copper ingots? Why? d. If Canada and Chile specialize, how many tones of wheat and how many tonnes of copper ingots will be produced? XXXXXXXXXXExplain how each of the following events will influence the demand or supply of coffee, and predict the change in equilibrium price and equilibrium quantity. (10 marks) a. A major health study implicates coffee as a prime source of cholesterol that contributes to heart disease. b. A new breed of coffee is developed that is resistant to diseases and is high yielding per stem. c. Personal disposable income of consumers decrease. d. Canada and US start buying much more coffee. e. Land used for coffee is now used for growing corn XXXXXXXXXXUse the table below to answer the questions that follow. (10 marks) Item Amount (in billions of dollars) Consumption expenditure 379 Government expenditure 99 Imports of goods and services 40 Interest and investment income 48 Profit of corporations and government enterprises 80 Income from farms and unincorporated businesses 40 Gross investment 176 Exports of goods and services 54 Wages, salaries and supplementary labour income 365 Capital consumption allowance 60 Indirect taxes less subsidies XXXXXXXXXXa. Use the expenditure approach to calculate GDP. b. Use the income approach to calculate GDP. c. Calculate net domestic product (at factor cost). d. Compute net investment and net exports XXXXXXXXXXIf the nominal GDP is $559 billion in the base year, and it rises to 577 in Year 1, and 605 in Year 2, what is the real GDP in each year, given that the price index has risen from 100 to 104.5 in the first year and up to 108.3 in the second year? If the price index 20 years before the base year was 41.2, and the nominal GDP for 20 years before the base year was 191.0, what was the real GDP for that year? Show your work in all cases. (10 marks XXXXXXXXXXIn 2008, India experienced a surge inflation exceeding 11 percent, large government deficits, and rising interest rates. Most economists expected India’s growth to slow. (10 marks) a. Suppose that the Indian government reduces its deficit and gets back to a balanced budget. If other things remain the same, how will the demand or supply of loanable funds in India change? b. With economic growth forecasted to slow, future incomes are expected to fall. If other things remain the same, how will the demand or supply of loanable funds in India change? c. Distinguish between the crowding-out effect and the Ricardo-Barro effect. How are the two effects related? 9. If a severe drought decreased labour productivity in Zambia, explain what will happen to each of the following. (10 marks) a. potential GDP b. employment c. the real wage rate XXXXXXXXXXStatistics Canada reported the following data for July 2004: the Canadian labour force was 19.65 million; Canadian employment was 18.32 million; the Canadian working-age population was 27.13 million. Based on these figures, calculate the following for July XXXXXXXXXXmarks) a. the number of people unemployed b. the unemployment rate c. the labour force participation rate d. the employment-to-population ratio