FIRST TAKE-HOME EXERCISE SET [6 Points Total]       L. Tesfatsion
DUE DATE:  Tuesday, September 10, 2:10 P.M.         Econ 302/Fall 96

**PLEASE NOTE: To receive credit, you must turn in your assigned exercise
set by the beginning of class on the due date.  Late assignments will NOT
be accepted -- no exceptions!

EXERCISE 1.1 [3 Points]. HT Chapter 1, MACROSOLVE Exercise 2, page 30.

CORRECTION: Use the MacroSolve **GRAPH** (not PLOT) option to answer
this exercise.  Sorry!!

#Be sure to justify your assertions and include with your answer a
copy of any MacroSolve data used in your answer#.

     NOTE: A MacroSolve 3 1/2" diskette (for IBM compatibles) should be
included along with your required Hall and Taylor textbook.  You can also
special order a Macintosh version of MacroSolve if you prefer.  Be sure to
read the "HT Appendix:Introduction to MacroSolve" before attempting to
install or use MacroSolve.  If you do not wish to install MacroSolve
yourself, remember that MacroSolve is already installed on all of the pc's in
the Computer Lab, Heady 68 -- see the Econ 302 home page for detailed
information concerning how to use MacroSolve in the Computer Lab.  You can
also seek help from the TA Fang Cai, from me, from personnel in the Computer
Lab, or from the personnel in the Econ Help Room in Curtiss 301. (See the
Econ 302 home page for our office hours and for Help Room hours).

EXERCISE 1.2  [3 Points Total, 1 Point Each Part]. Suppose you are
analyzing the economic situation of the U.S. in some given year.  #Fill in
the blanks, below, and carefully justify your answers#.
   [NOTE: This is a slightly modified version of HT Chapter 2, NUMERICAL
exercise 2, page 61. and is based on HT2 and the Basic Class Lecture Notes
for HT2.]

PART A: If U.S. investment is $700 billion, U.S. private saving is $650
billion, and the U.S. current account deficit is $100 billion, then the U.S.
government budget deficit is _________  billion.

PART B:  If the stock of raw materials in the U.S. is $500 billion at the
end of 1988 and $520 billion at the end of 1989, the stock of parts in the
U.S. is $50 billion at the end of 1988 and $50 billion at the end of 1989,
and the stock of unsold finished goods is $40 billion at the end of 1988 and
$30 billion at the end of 1989, then U.S. inventory investment for 1989 is
___________ billion.

PART C: Suppose factor payments by ROW to U.S. citizens living abroad and
to U.S. capital abroad are $50 billion in 1965, factor payments by the U.S. to
ROW citizens living in the U.S. and ROW capital in the U.S. are $30 billion in
1965, net transfer payments (foreign aid and gifts) from the U.S. to ROW are
$1 billion in 1965, and the GNP for the U.S. in 1965 is $4,000 billion.  Then
the GDP for the U.S. in 1965 is __________  billion.