ECO 221 MACROECONOMICS ASSIGNMENT 1

Use databank.worldbank.org (shown in class) as your data source.

1. Comparing GDPs across countries (40 points)

This has been recently reported that China has surpassed Japan 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 THREE countries.

1. Graph the GDPs of the above mentioned countries (note: use GDP (constant 2010 US$)). Comment (5 points).
2. 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 2017 international $)). Comment and compare with a.) (5 points).
3. Is China catching up with the US? How large is the USA economy relative to the Chinese economy? (Hint: Of each available year, calculate the ratio of the US GDP relative the China GPD. Graph the ratio across the years (you should have one single graph). Use GDP (constant 2010 US$)).) Comment! (5 points).
4. Making sense of it all: graph GDP growth (annual %) for the US and China. Comment (10 points).
5. For Each Country, calculate and interpret the 10-year growth averages of GPD, Population and GDP per capita. See format below (do one table for EACH COUNTRY). (15 points)

ECO 221 MACROECONOMICS ASSIGNMENT

2. Standard of Living or ‘Command over Resources’ (20 points)

Despite rapid economic growth China struggles to make in the top countries in term of income per capita. Using GDP per capita (constant 2010 US $), redo a.; c.; and d. in 1. (NOTE: for c./ , use USA and China ONLY). Comment! (2.5 points each)

3. Price Level: CPI and Inflation (20 points)

For this section, use USA, Brazil and Nigeria.

1. Graph on the CPI of the above mentioned countries [Use: Consumer price index (2010=100)]. Comment! (10 points). [Hint: It helps to graph all three together, then do another graph for Nigeria and Brazil ONLY, then to a graph for each country. The relative and individual nuances appear in a better light! This enhances your interpretations!]
2. Graph on the Inflation rate of the above mentioned countries [Use: Inflation, consumer prices (annual %)]. Comment! (10 points). [Hint: It helps to graph all three together, then do another graph for Nigeria and Brazil ONLY, then to a graph for each country. The relative and individual nuances appear in a better light! This enhances your interpretations!]

4. Employment, Unemployment and GDP (20 points)

a. Select 2 OECD countries (High income developed countries). Graph their unemployment rate (use Unemployment, total (% total labor force). Comment! (10 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! (10 points).

ECO 221 MACROECONOMICS ASSIGNMENT

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