Economics 214 Problem Set 1 Complete All Questions Listed Be

Econ 214problem Set 1complete All Questions Listed Below Clearly Labe

Evaluate the following set of questions encompassing economic analysis, labor force classification, and aggregate demand-supply models. Convert nominal movie revenues into real dollars, classify individuals based on labor force status, calculate key labor market ratios, and analyze economic equilibrium based on aggregate demand and supply data.

Paper For Above instruction

Question 1: Converting Nominal Box Office Revenues to Real Dollars

The dataset includes the receipts and release years of five top-grossing movies, along with the Consumer Price Index (CPI) for each release year, with current CPI at 218.1. The movies are Avatar, Titanic, Star Wars, Shrek, and E.T. The Extra-Terrestrial, with respective nominal revenues of $760 million, $600 million, $550 million, $490 million, and $399 million.

To account for inflation and compare their revenues in real terms, we adjust each movie's nominal revenue by the ratio of the CPI in the year of release to the CPI in the reference year (CPI 218.1). The formula for real revenue is:

Real Revenue = Nominal Revenue × (CPI in 218.1 / CPI in Year of Release)

Calculations are as follows:

• Avatar (2009):
• Real Revenue = $760 million × (218.1 / 215.1) ≈ $760 million × 1.0139 ≈ $770.1 million
• Titanic (1997):
• Real Revenue = $600 million × (218.1 / 160.5) ≈ $600 million × 1.359 ≈ $815.4 million
• Star Wars (1977):
• Real Revenue = $550 million × (218.1 / 63.1) ≈ $550 million × 3.455 ≈ $1,900.3 million
• Shrek (2001):
• Real Revenue = $490 million × (218.1 / 109.8) ≈ $490 million × 1.987 ≈ $972.6 million
• E.T. (1982):
• Real Revenue = $399 million × (218.1 / 137.0) ≈ $399 million × 1.592 ≈ $635.0 million

Ranking the movies from largest to smallest in real dollars yields:

1. Star Wars: approximately $1,900.3 million
2. Titanic: approximately $815.4 million
3. Shrek: approximately $972.6 million
4. Avatar: approximately $770.1 million
5. E.T.: approximately $635.0 million

Note: Adjustments are approximate, based on CPI ratios. The data demonstrate how inflation adjustment alters the perceived box office success relative to the base year CPI.

Question 2: Classify Individuals as Employed, Unemployed, or Not in the Labor Force

Explanation:

• Beth is not working but is seeking employment; hence, she is classified as "not in the labor force."
• Juan is on temporary layoff, expecting recall; thus, he is "employed" or "unemployed" depending on if actively seeking work. Since he is laid off but expects to be recalled and is not currently working, he is considered unemployed.
• Bob is laid off and seeking work, classified as "unemployed."
• Jade, a homemaker working in family care, is neither employed nor seeking employment, so "not in the labor force."
• Carson works part-time (6 hours/week). Typically, working less than 35 hours per week classifies as part-time employment.
• Brady is working 3 hours daily and seeking full-time work, so he is considered employed in the part-time sense but actively seeking full-time employment (classified as employed).

Question 3: Calculating Labor Market Ratios

Given data:

• Population ≥16 years old: 15,000
• Labor force: 7,300
• Not currently working: 4,500
• Employed full-time: 5,000
• Employed part-time: 1,100
• Unemployed: 1,200 (assuming total labor force minus employed)

Calculations:

a) Labor Force Participation Rate

Participation Rate = (Labor Force / Population) × 100 = (7,300 / 15,000) × 100 ≈ 48.67%

b) Unemployment Rate

Unemployment Rate = (Unemployed / Labor Force) × 100 = (1,200 / 7,300) × 100 ≈ 16.44%

c) Employment-to-Population Ratio

Employment Ratio = (Employed / Population) × 100 = ((5,000 + 1,100) / 15,000) × 100 ≈ (6,100 / 15,000) × 100 ≈ 40.67%

Question 4: Economic Equilibrium Analysis

Given an economy with aggregate demand (AD) and short-run aggregate supply (SRAS) curves, and an anticipated price level of P=105:

• a) The equilibrium GDP during the period is determined where the AD curve intersects the SRAS curve. Since decision-makers have based expectations on a price level of 105, the actual output will align with that level, assuming no shifts occur. Typically, this output is the quantity where AD meets SRAS at P=105.
• b) This is not necessarily a long-run equilibrium because the actual price level may differ, and if actual GDP deviates from potential GDP, adjustments in wages and prices will occur over time. As such, unless the AD and SRAS are both aligned at the natural level of output, this short-run equilibrium may be temporary.
• c) If the actual price level matches the expected P=105, then unemployment during this period will oscillate around the natural rate. If the actual price exceeds expectations, unemployment might fall temporarily below the natural rate; if below, unemployment might rise.
• d) The sustainability of the current GDP depends on whether aggregate demand and supply adjust dynamically to maintain equilibrium. Without external shocks or policy interventions, deviations typically correct over time, making the current GDP sustainable only if the economy is at or near its long-run potential output.

Conclusion

This collection of questions illustrates core concepts in macroeconomic measurement, labor market classification, and short-term economic analysis. Converting nominal revenues into real terms underscores the importance of inflation adjustment in assessing economic success. Accurate classification of labor force status is essential in understanding unemployment dynamics. Finally, analyzing aggregate demand and supply models helps in understanding macroeconomic equilibria and the sustainability of economic output, especially in the short run.

References

• Bureau of Labor Statistics. (2023). Labor Force Statistics from the Current Population Survey. U.S. Department of Labor.
• Cecchetti, S. G., & Schoenholtz, K. L. (2021). Money, Banking, and Financial Markets. McGraw-Hill Education.
• Gwartney, J., Stroup, R., Sobel, R., & Macpherson, D. (2020). Economics: Private and Public Choice. Cengage Learning.
• Hubbard, R. G. (2022). Macroeconomics. Pearson.
• Mankiw, N. G. (2021). Principles of Economics. Cengage Learning.
• Blanchard, O. (2017). Macroeconomics. Pearson.
• Federal Reserve Bank of St. Louis. (2023). Inflation Data & CPI Statistics. Retrieved from https://fred.stlouisfed.org
• Kuttner, K. N. (2022). Central Banking: Before, During, and After the Crisis. Journal of Economic Perspectives, 36(3), 45-68.
• International Monetary Fund. (2023). World Economic Outlook. IMF Publications.
• Romer, D. (2019). Advanced Macroeconomics. McGraw-Hill Education.