TD Worksheet No.
Exercise 1: Measurement of a Phenomenon – Rate of Change
Percentage of Unemployed in the Active Population (Ages 15-64), by Country
1/ What is (are) the population(s) studied? What is (are) the characteristic(s)? Are the
measurements expressed in levels or variations?
2/ Calculate, if applicable, the levels, quarterly variations in the form of multiplicative
coefficients, and quarterly variations in the form of percentage rates for Germany. In each
case, write a sentence interpreting the measure obtained for Q3 2010 for Germany.
3/ Convert the quarterly variations into annual variations.
4/ Considering an index of 100 in Q1 2009, calculate the values in index form. What is the
purpose of this transformation? Interpret the index obtained for Q1 2010.
5/ Complete the United Kingdom column knowing that the index in Q4 2010 is 106, and the
unemployment rate in the United Kingdom increased by 43% between Q1 2009 and Q1
2010. It decreased by 2% between Q2 and Q3 2009.
Exercise 2: Graphs, Slopes, and Solving a System of Two Linear Equations
1/ Consider the equation Y = 0.5X + 3 (1).
Fill in the following table, then represent the two points in the (X,Y) plane. Draw the line
corresponding to the above equation.
2/ Recall that the slope of a line indicates how much the ordinate increases when the
abscissa increases by one unit. It corresponds to the ratio of the variation of Y over the
variation of X: ∆Y/∆X.
Calculate the slope of the equation above.
3/ Now consider the line with the equation Y = 8 - 2X (2).
Fill in the following table, then represent the two points in the (X,Y) plane. Draw the line
corresponding to this new equation.
4/ Calculate the values of X and Y that simultaneously satisfy equations (1) and (2).
5/ Same question, but using a graphical solution method.
Exercise 3: Non-Linear Relationship Between 2 Variables, Linear Approximation
Table: Enrollment Rate in France in 2009, by Age
1/ Graphically represent the relationship between enrollment rate and age. Consider that one
graduation on the y-axis (enrollment rate) corresponds to 10 points, and one graduation on
the x-axis (age) corresponds to 1 year, placing the origin of the years at age 12. Interpret.
2/ Is the relationship between age and enrollment rate linear or non-linear? Increasing or
decreasing? Positive, negative, or null?
3/ Consider the tangent to this curve when A = 15, calculate its slope (using the coordinates
of the next point).
4/ Consider the tangent when A = 22 and calculate its slope. Interpret. What would happen if
the relationship between age and enrollment rate were linear?
5/ Calculate the growth rate of the enrollment rate by age and represent it graphically. What
do you think of the linear approximation? Interpret.
6/ From the results of the previous question, make a forecast of the enrollment rate up to
age 24. Represent both the observed and simulated enrollment rates on the same graph.
What do you think?
Hint: simulated enrollment rates above 100% should be brought down to 100%.
7/ Continue the forecast of the enrollment rate until age 25. Compare it with the observed
enrollment rate in 2010 by INSEE, which is 10.92%.
8/ To finance youth employment policies (training, job search assistance, subsidies for
employment), the Minister of the Economy asks you for a forecast of the number of young
people under 26 on the labor market and unemployed. Propose a forecasting method based
on the previous questions. Compare it to the observed number of young beneficiaries in
2010, which was 1,122,000 young people.
Hints: Assume there are 750,000 births per year in France, and the unemployment rate for
those under 26 is around 23%.
Exercise 4: Multiple Choice Questions (MCQ)
1/ The quarterly growth rate of GDP in annual terms is written as:
A. GRt = (Yt - Yt-4) / Yt-4, where t represents months
B. GRt = (Yt - Yt-12) / Yt-12, where t represents months
C. GRt = (Yt / Yt-4), where t represents quarters
D. GRt = (Yt - Yt-4) / Yt-4, where t represents quarters
2/ In Q2 2008:
A. GDP is lower than Q2 2007, and the economy is growing.
B. GDP is lower than Q2 2009, and the economy enters a recession.
C. GDP is higher than Q2 2007, and the economy enters a recession.
D. None of the above.
Exercise 5: Multiple Choice Questions (MCQ)
Given GDP 2010 = 30,000 and GDP 2009 = 60,000.
1/ The growth rate of GDP is:
A. 50%
B. -30%
C. -50%
D. 30%
2/ The GDP index for 2010 with a base of 100 in 2009 is:
A. 50
B. 80
C. 150
D. 160
TD Worksheet No. 2
Questions:
1. Explain the difference between macroeconomics and microeconomics. What
connects these two fields?
2. Why do economists use models?
Exercise 1: Practical Application of Economic Methodology
A) Graphical Analysis: In a market equilibrium model, the aggregate supply and demand
functions are given by: QD = D(Pp, Y) and QS = S(Pp, Pc).
1. What are the endogenous and exogenous variables?
2. Analyze graphically the effect of a decrease in Y.
3. Analyze graphically the effect of an increase in Pc.
4. Analyze graphically the combined effect of a decrease in Y and an increase in Pc.
Discuss the effects of these shocks on the equilibrium price and quantity.
B) Algebraic Analysis: Suppose the supply and demand functions are specified as:
D(Pp, Y) = 20 - 10Pp + 15Y and S(Pp, Pc) = 20 + 5Pp - 15Pc.
5. Calculate, at market equilibrium, the equilibrium price Pp* in terms of Y and Pc.
6. Calculate at market equilibrium, the effect of a 1-unit decrease in Y on the equilibrium
price.
7. Calculate at market equilibrium, the effect of a 1-unit increase in Pc on the
equilibrium price.
8. What is the effect of an equal magnitude change in Y and Pc on the equilibrium
price? You can now illustrate the effect graphically.
C) Study of the Effect of a Policy Affecting Demand:
Now let’s study the effect of a tax T entering as an exogenous variable in the demand
function:
QD = D(Pp, Y, T)
9. How do taxes influence demand?
10.Suppose the government reduces the tax burden on households. Analyze graphically
the effect of this fiscal shock on market equilibrium.
D) Study of the Effect of a Policy Affecting Supply:
The supply function now includes the price of tomato sauce Ps.
11.If the European Union reduces the subsidies granted to tomato producers, what will
be the effect of this shock on market equilibrium?
Exercise 2: Consider the competitive market for apple pies, which is a normal good.
The supply of apple pies depends on the price of apples Pp and the price of the pie Pt. The
demand for apple pies depends on the price of the pie Pt and the consumer’s income R.
1. In this model, a decrease in consumers’ income leads to:
A. A decrease in the quantity of pies produced and a decrease in prices.
B. A decrease in the quantity of pies produced and an increase in prices.
C. A decrease in the quantity of pies produced and unchanged prices.
D. We cannot say anything.
2. In this model, an increase in the price of apples leads to:
A. A decrease in the quantity of pies produced and a decrease in prices.
B. A decrease in the quantity of pies produced and an increase in prices.
C. A decrease in the quantity of pies produced and unchanged prices.
D. We cannot say anything.
3. In this model, a simultaneous increase in the price of apples and income leads to:
A. A decrease in the quantity produced.
B. A decrease in prices.
C. An increase in prices.
D. We cannot say anything.
