Question A.1 [8 marks]. Consider the following data for a country called "Weightonia": Year 1 Year 2 Real GDP (year 1 prices) $400 $530 Real GDP (year 2 prices) $460 $600 Compute Real GDP in year 2 in "Weightonia" by applying the Chain-Weighting approach. Use year 1 as the reference year. Question A.2 [8 marks]. Suppose you are interested in isolating the cyclical component of a macroeconomic time series (such as GDP). Give at least one reason why assuming a non-linear trend would be preferable than assuming a linear trend. Question A.3 [8 marks]. The Hodrick-Prescott filter computes the non-linear trend {g:}=1 of an economic time series {y } , by solving: T-1 min [ (4 - 9.)2 + * [ [(91+1 - 91) - (9 -91-1)]? How does a decrease in > affect the behaviour of {g:}, ? Explain. Question A.4 [8 marks]. Consider the Two-Period Endowment Model of the Household studied in class. Suppose that optimal consumption in the first period is given by: 1+r 2+7 X we, (1) where we is the household's lifetime wealth (after taxes). Is the optimal consumption behaviour implied by (1) consistent with the Permanent Income Hypothesis? Why? Question A.5 [8 marks]. Consider the Complete Model of the Household studied in class. Suppose that total factor productivity = increases. What is the effect on labour supply? Explain