Problem Set 1 Complete: All Questions Listed Clearly

Problem Set 1complete All Questions Listed Below Clearly Label Your A

Problem Set 1 Complete all questions listed below. Clearly label your answers. 1. The receipts and year of release of the five movies with the largest nominal box office revenues, along with the CPI data of each year are presented below. Assuming that the receipts for each of the movies were derived during their year of release, convert the receipts for each to real dollars for the year CPI 218.1. Put the movies in order from largest to smallest real box office receipts.

Movies Nominal Box Office Receipts (millions) | Year Released | CPI in Year Released

• Avatar: $760.5 | Year: ??? | CPI: ???
• Titanic: $600.5 | Year: ??? | CPI: ???
• Star Wars: ??? | Year: ??? | CPI: ???
• Shrek 2: ??? | Year: ??? | CPI: ???
• E.T. The Extra-Terrestrial: ??? | Year: ??? | CPI: ???

Note: The data appears incomplete in the user prompt; typically, actual data tables are provided.

Use the following data to calculate (a) the labor force participation rate, (b) the unemployment rate, and (c) the employment/population ratio.

• Population age 16 and over: 15,000
• Labor force: 7,300
• Not currently working: 4,500
• Employed Full-time: 5,000
• Employed Part-time: 1,100
• Unemployed: ???

1. Consider an economy with the following aggregate demand (AD) and short-run aggregate supply (SRAS) schedules. Decision-makers previously anticipated the price level during the current period to be P = 105.

a. Indicate the quantity of GDP that will be produced during the period.

b. Is it a long-run equilibrium level of GDP? Why or why not?

c. How will the unemployment rate during the current period compare with the natural rate of unemployment?

d. Will the current rate of GDP be sustainable into the future? Why or why not?

Paper For Above instruction

This paper addresses multiple macroeconomic and economic analysis questions derived from a problem set. It covers the calculation of real box office receipts for movies using Consumer Price Index (CPI) adjustments, evaluates labor market indicators including labor force participation, unemployment rate, and employment-to-population ratio, and analyzes an economy's aggregate demand and supply model to determine equilibrium output, unemployment implications, and sustainability of current GDP levels.

Recalculation of Real Box Office Receipts

To assess which movies performed best in real terms, we need to convert their nominal revenues into real dollars using the CPI. The CPI index is set at a base value of 218.1 for the period in question. Although the exact CPI data per year is missing in the provided data, the typical approach involves dividing the nominal receipts by the CPI in the year of release and then multiplying by the CPI in the base year (218.1), following the formula:

Real Revenue = (Nominal Revenue) × (CPI in base year) / (CPI in release year)

For instance, if an earlier year’s CPI is 180, and the nominal revenue is $760 million, then the real revenue in the base year terms would be:

$760 million × 218.1 / 180

This calculation adjusts for inflation, enabling comparison of movies’ revenues across different years in a consistent dollar value. Due to incomplete data on the release years and CPI figures, precise calculations are not presented here. In practice, once CPI values are known, the movies should be ordered from highest to lowest based on their calculated real revenues.

Labor Market Indicators

The labor force participation rate measures the proportion of the population aged 16 and over that is either employed or actively seeking employment. It is calculated as:

Labor Force Participation Rate = (Labor Force / Population aged 16 and over) × 100 = (7,300 / 15,000) × 100 ≈ 48.67%

The unemployment rate is the percentage of the labor force that is unemployed and actively seeking work, calculated as:

Unemployment Rate = (Unemployed / Labor Force) × 100

The number of unemployed individuals is not directly provided but can be derived if total not currently working is given, assuming all not working are unemployed and seeking employment. Since 4,500 are not currently working and the employed total is 6,100 (full-time + part-time), the unemployed would be:

Unemployed = Not currently working - (Employed Full-time + Employed Part-time) = 4,500 - 6,100 = -1,600

Negative unemployment indicates data inconsistency, likely implying that not all not currently working are unemployed or that some employed are temporarily absent. Assuming correct data, if 4,500 constitutes unemployed, then:

Unemployment Rate = (4,500 / 7,300) × 100 ≈ 61.64%

The employment-population ratio reflects the proportion of the total population aged 16+ that is employed:

Employment/Population Ratio = (Employed / Population aged 16 and over) × 100 = (6,100 / 15,000) × 100 ≈ 40.67%

Analysis of Aggregate Demand and Supply

Considering the AD and SRAS schedules where the price level is anticipated at P=105, the equilibrium quantity of GDP is determined at the intersection point of AD and SRAS curves. If decision-makers expect P=105 and the actual equilibrium occurs at a different output, the actual GDP is determined by where the AD curve intersects SRAS at that price level. Without specific numerical data for the AD and SRAS shifts, the precise GDP quantity cannot be calculated.

In the context of macroeconomic theory, if the current equilibrium output is above the natural level of GDP, the economy might experience overheating with increased unemployment and inflation; if below, it indicates a recessionary gap.

The natural rate of unemployment is the rate arising from frictional and structural factors, not cyclical fluctuations. When actual unemployment exceeds this rate, the economy is below its potential; if it is lower, the economy is likely overheating.

Regarding the sustainability of current GDP, if the output exceeds the long-run potential, it is likely unsustainable, leading to inflationary pressures. Conversely, if it is below potential, economic slack exists, and the current GDP may not be sustainable without adjustments such as policy interventions.

Conclusion

This analysis integrates macroeconomic calculations and theoretical frameworks to interpret consumer behavior, labor market conditions, and economic equilibrium, essential for understanding economic health and policy implications.

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