Comiland is a country that I made up while thinking about this question. Imagine
ID: 1208867 • Letter: C
Question
Comiland is a country that I made up while thinking about this question. Imagine that there are 2,000 people who live in this country, 200 of which are unemployed and 1300 of which are employed. The CPI for this country was 115% in 2005 and 125% in 2007. Real GDP of Comiland in 2010 was $120 million and Real GDP in 2011 was $121 million. What is the labor force in Comiland? Show your work! What is the unemployment rate of Comiland? Show your work! Calculate inflation rate in Comiland from 2005 to 2007. Show your work! Assume that college tuition in Comiland was $1000 per semester in 2005. In 2007, the tuition increased to $1100. Taking into account inflation, who paid more for tuition, students in 2005 or students in 2007? Explain. Calculate real GDP growth for Comiland from 2010 to 2011. Show your work! Assuming that the population did not changed in the past 20 years for Comiland, calculate its GDP per capita for 2011. Show your work!Explanation / Answer
a. Labor force of comiland = Employed + unemployed = 1300 + 200 = 1500
b Unemploynment rate = unemployed/Labor Force*100 = 200/1500*100 = 13.33%
c Inflation Rate = CPI of 2007 - CPI 0f 2005 = 125% - 115% = 10%
d Both students Paid the same fee , As the inflation rate is 10%, so increase in price from 2005 to 2007 will be 10% , So, the 1000 fee in 2005 , will be same 100(1+0.10) = 1100 in 2007.
Hence students pay same fee as increase in fee is equal to the inflation change , so there is no real change in fee , only nominal value changes.
e growth rate = real GDP of 2011 - real GDP of 2010 = $121 - $120 = $1 Million
f. GDP per Capita = GDP/Population = 1 Million/2000 = 1000000/2000 = $500 per capita
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