Homework 2:

Inflation & GDP

ECON 101 – Macroeconomics
Professor Schenk
Due: July 12, 2009
July 10, 2010

1. Consider the State General Aid (SGA) funding to Iowa’s community colleges between 2000 and 2008.

Year Nominal Funding Number of Students Funding Per Student

2000 120,842,833 95,556
2001 126,492,784 98,602
2002 143,925,326 105,719
2003 157,901,666 111,745
2004 173,303,945 116,439
2005 192,008,125 120,217
2006 197,923,928 121,753
2007 207,459,968 125,990
2008 220,652,139 128,146

(a) What was the funding per student between 2000 and 2008? Did it increase or decrease?
(b) Now use the Consumer Price Index below to adjust the nominal (not inflation adjusted) funding
to real (inflation adjusted) dollars (2008):

Year Nominal Funding Consumer Price Index Real Funding (2008)

2000 120,842,833 168.8
2001 126,492,784 175.1
2002 143,925,326 177.1
2003 157,901,666 181.7
2004 173,303,945 185.2
2005 192,008,125 190.7
2006 197,923,928 198.3
2007 207,459,968 202.416
2008 220,652,139 211.09

(c) What was the real funding per student between 2000 and 2008? What were the qualitative
differences between 1a and 1b?
2. Below is data from the most recent employment report by the U.S. Bureau of labor Services (BLS). In
August 2009 there were 154,577,000 in the labor force who were over 16 years–old. Of that, 96,437,000
did not have jobs. With the approximate 96 million, 81,509,000 were not looking for jobs. What was
the unemployment rate? (Note: These numbers are seasonalized estimates).

1
 Year Real Funding Per Student
2000
2001
2002
2003
2004
2005
2006
2007
2008

3. The Bureau of Economic Analysis (BEA) estimates GDP every quarter. Recently, BEA estimated GDP
was $14,264,600,000,000 (over 14 trillion or 14,264.6 billion). Below are the individual component with
some blanks. Fill the missing values (personal consumption and net exports):

Category Amounts
Personal consumption expenditures
Gross private domestic investment 1,948.4
Net exports of goods and services
Exports 1,758.4
Imports 2,287.4
Gross Domestic Product 14,264.6

You’re Done!