Solution to quiz 1

1. (a): 4)
1. (b): 2), 3)
1. (c): 2)
1. (d): 1), 3)
2. $100-$70=$30. The water does not factor in.
3. Look at the correlations of the series with GDP at various leads and lags, find the highest correlation.
4. P1Q2=4x10+5x8=80. P2Q2=5x10+8x10=90. inflation is (90-80)/80=12.5%.
5. Goods purchased by private households that last for more than a quarter, excluding residential housing.
6. Sorry, cannot graph that here.
Bonus: Imports are directly related to domestic income, whereas exports are related to foreign income, which is itself indirectly related to domestic income.