Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Question

Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Edition 12ISBN: 978-1259070969

Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Edition 12ISBN: 978-1259070969

Exercise 1

In this exercise, we will calculate by how much U.S. per capita real income has increased between the year you were born and today. Go to http://research.stlouisfed.org/fred2. To find real GDP data, click on "Categories" under "National Accounts," select "National Income Product Accounts," then "GDP/GNP". Then search "GDPCA." For population data, go back to the FRED II home page and click on "Categories" under "Population, Employment, Labor Markets," select "Population," then search "Employment Population." Under "Categories," select "Population," "POP." Use the information provided at these two places to fill in columns 1 and 2 in the table below. Note that you may need to transform the series into annual averages; to do this, take the average of the monthly data in the desired years. You can calculate real GDP per capita by dividing real GDP by population. After filling in columns 1 and 2, you can find out how much per capita income is higher today compared to the year you were born ( Hint : Simply divide the value in column 1 by the value in column 2).

Explanation

Verified

Since this question requires comparisons between the current year and a student's birth year, the answer is student specific. The answers below are based on the assumption that a student was born on 01/01/1990, and that this year is the start of 2009 (the most recent year for which data are currently available). Using the data for 01/01/1990 and 01/01/2009, we find that real income per capita in the U.S. was about 1.3 times as high in 2009 as it was in 1990.