Exam 1

Due Date: 9/26/2017 12:00 noon. Both printed and electronic versions must be submitted.

1. Explain why, when comparing data series over time, it is important to compare real values rather than nominal values.

2. Find data for US Real GDP and compare real GDP, 2nd quarter, and it's major category components, for 2007, 2010, and 2017.

• As you did in HW #1, calculate the percentage of GDP purchased by each major spending spending category.
1. Compare the numbers and speculate on the causes of any changes that occurred.

3. a. Explain how the consumer price index is calculated.

b. Using the CPI index contained at this SeriesReport-20170920132747_96ba0d.xlsx below, calculate the inflation rate between January 2007 and August 2017.

c. Using the information contained at this LINK, choose 5 major categories of expenditures (your choice of category), describe the category and list the level of importance of this item to the household consumption bundle.

d. The data in part 'c' is based on a 2013-14 weighted average. Why doesn't the BLS update the data for 2017 consumption patterns?

4. Explain why GDP may be a poor measure of the quality of life. In your answer, and using data in this link, explain why the U.S. does not rank as number 1 in the UN Human Development Index.