ECN 222 Fall 2022 Exam 1 Process Exercise The first step to having a conversation or answering questions in a discipline is to know the terminology so that you can speak the language/understand the questions and then to know the frameworks/models that help guide thinking about a topic or question. Below are some exercises to help get us in the groove with specific instructions. Since our focus is on process as much as correct answers, you must follow the instructions and process closely to receive your full points. To help set us up, please write out the following and note that when writing out a formula or equation, there are two sides to it. For example, MC2 isn't all that useful, the equation is E=MC2. Please write out the full equation. ( 1/2pt each) 1. Percentage change equation: 2. Real Inflation Rate: 3. Converting prices across time: 4. Unemployment Rate: 5. Labor Force Participation Rate: 6. Sketch the diagram of the breakdown of the adult population below. Below you will find a few questions and instructions on how to set up and then solve the problem. Please work through them methodically following the instructions. (It may be worth working through each one on a different piece of paper before copying them over to this document.) Materials needed: Black Pen, Red Pen, Blue Pen, Green Pen 1. Given that the unemploymant rate is 4.6%, there are 8 people unemployed, and 89 people not in the labor force, what the labor force participation rate? (2pts) Instructions: In red pen, write out the equation for the unemployment rate, underneath, write out the equation for the labor force participation rate in red, and then finally, sketch out the diagram for the adult population breakdown in red. Now that it's set up, start working toward solving the problem by writing each equation and the breakout diagram again, but this time use a black pen for any numbers that you can plug in, if you don't have a number to plug in, write the variable name in red. Next to each equation you have written out, label it as to which equation it is, i.e, "u-rate" next to one, LFPR next to the other. (You should have 4.6% in black, 8 in black, 100 in black, and Labor force or LF in red for the U-rate equation, the LFPR equation will be all red except for 100 and the adult pop breakdown will be red except for 89 ) Now let's finish solving the problem. From the U-rate equation, solve for LF, then, in green, write that number next to the red LF in the LFPR equation and adult pop break down. In blue pen, write in the number for the adult population in both your adult pop breakdown and your LFPR equation. Somewhere write the LFPR, rounded to one decimal, in blue pen and draw a box around it, your final answer. 2. Many folks recall the good old days of when gasoline cost 1.11 per gallon in 1995 . But wages were also lower back then etc. To compare apples to apples, what is the equivalent of that amount today? ( 2 pts) Instructions: Write out the equation to convert prices across time in red pen. The write out the equation again but filling in any variables you can in black pen and the remaining variables in red pen. Make sure to include units where appropriate (i.e. \$ signs) Solve for the remaining variable and write your answer in blue pen, draw a box around your final answer. Round to the nearest cent. 3. Nominal interest rates tell us how much the dollar amount of a deposit or debt is changing but decisions are really made by thinking about how much purchasing power changes, what we call the real interest rate. In 2014 the nominal interest rate was 2.5, and the CPI in 2014 was 236.72 and in 2015 the CPI was 237 . What was the real interest rate? (2pts) Instructions: Use similar steps and colors to the questions above but this time without as much guidance. ECN 222 Fall 2022 Exam 1 Process Exercise The first step to having a conversation or answering questions in a discipline is to know the terminology so that you can speak the language/understand the questions and then to know the frameworks/models that help guide thinking about a topic or question. Below are some exercises to help get us in the groove with specific instructions. Since our focus is on process as much as correct answers, you must follow the instructions and process closely to receive your full points. To help set us up, please write out the following and note that when writing out a formula or equation, there are two sides to it. For example, MC2 isn't all that useful, the equation is E=MC2. Please write out the full equation. ( 1/2pt each) 1. Percentage change equation: 2. Real Inflation Rate: 3. Converting prices across time: 4. Unemployment Rate: 5. Labor Force Participation Rate: 6. Sketch the diagram of the breakdown of the adult population below. Below you will find a few questions and instructions on how to set up and then solve the problem. Please work through them methodically following the instructions. (It may be worth working through each one on a different piece of paper before copying them over to this document.) Materials needed: Black Pen, Red Pen, Blue Pen, Green Pen 1. Given that the unemploymant rate is 4.6%, there are 8 people unemployed, and 89 people not in the labor force, what the labor force participation rate? (2pts) Instructions: In red pen, write out the equation for the unemployment rate, underneath, write out the equation for the labor force participation rate in red, and then finally, sketch out the diagram for the adult population breakdown in red. Now that it's set up, start working toward solving the problem by writing each equation and the breakout diagram again, but this time use a black pen for any numbers that you can plug in, if you don't have a number to plug in, write the variable name in red. Next to each equation you have written out, label it as to which equation it is, i.e, "u-rate" next to one, LFPR next to the other. (You should have 4.6% in black, 8 in black, 100 in black, and Labor force or LF in red for the U-rate equation, the LFPR equation will be all red except for 100 and the adult pop breakdown will be red except for 89 ) Now let's finish solving the problem. From the U-rate equation, solve for LF, then, in green, write that number next to the red LF in the LFPR equation and adult pop break down. In blue pen, write in the number for the adult population in both your adult pop breakdown and your LFPR equation. Somewhere write the LFPR, rounded to one decimal, in blue pen and draw a box around it, your final answer. 2. Many folks recall the good old days of when gasoline cost 1.11 per gallon in 1995 . But wages were also lower back then etc. To compare apples to apples, what is the equivalent of that amount today? ( 2 pts) Instructions: Write out the equation to convert prices across time in red pen. The write out the equation again but filling in any variables you can in black pen and the remaining variables in red pen. Make sure to include units where appropriate (i.e. \$ signs) Solve for the remaining variable and write your answer in blue pen, draw a box around your final answer. Round to the nearest cent. 3. Nominal interest rates tell us how much the dollar amount of a deposit or debt is changing but decisions are really made by thinking about how much purchasing power changes, what we call the real interest rate. In 2014 the nominal interest rate was 2.5, and the CPI in 2014 was 236.72 and in 2015 the CPI was 237 . What was the real interest rate? (2pts) Instructions: Use similar steps and colors to the questions above but this time without as much guidance