Assignment One Course Macroeconomics Total mark 10% Instructions: This is a group assignment. A group should consist of 3 to 5 people. Assignments submitted individually will not be accepted. Submit your assignment on or before August 6, 2017 Questions 1. Consider an economy that produces and consumes bread and automobiles. In the following table the data for two different years for the two goods in their market prices are listed. Good Automobiles Bread 2000 Quantity Price 100 $50,000 500,000 $10 Year 2010 Quantity 120 400,000 Price $60,000 $20 Taking the information in the table find a. Using the year 2000 as the base year, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed-weight price index such as the CPI. b. How much have prices risen between 2000 and 2010? 2. The great depression of 1930s was the greatest economic crisis the western world had experienced. There was decline in their GDP, increases in unemployment at alarming rate and decline in the general price level. The following table shows USA data on output, employment and price level as an example. 3. Discuss the need for government intervention according to classical , Keynesian, monetarist and new classical macroeconomist 4. What are the causes of the inflation in Ethiopia? What type of policy the government was taken to overcome the inflation? USA GDP, prices and unemployment: 1929–33 Year Real GDP $ Billions Price level Unemployment GDP deflator % 1929 103.1 100.0 3.2 1930 94.0 96.8 8.9 1931 86.7 88.0 16.3 1932 75.2 77.6 24.1 1933 73.7 76.0 25.2 According to the following schools explain the possible causes of the 1930s economic performance of the western economy. i) Keynesians macroeconomics ii) Monetarist macroeconomics iii) Classical macroeconomics 5. Discuss the need for government intervention according to classical , Keynesian, monetarist and new classical macroeconomist6. a) Explain why inflation in most developing countries considers to be a fiscal Phenomenon (the result of budgetary deficit) b) Currently, Ethiopia experiences high rate of inflation .What do you think about the Possible factors that contributes for such inflationary condition? Describe how the factors you identify leads to inflationary conditions. What type of demand management policy you recommend to overcome the problem.