Initial Publication Date: April 12, 2016
Units of Analysis: Sample Problems
Problem 1:
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Provenance: Jeffrey Sarbaum, University of North Carolina at Greensboro
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How well-off is the average person in Barbados?
- The value of total output (GDP) produced in Barbados in 2013 was 8.46 billion Barbados dollars.
- The population of Barbados in 2013 was 284,644 people.
- The exchange rate is 1 US dollar = 2 Barbados dollars
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To calculate a per capita measure, we divide the aggregate (total) amount by the number of people in the population of interest. In this case, we divide a national income measure (GDP) by total population. 8,460,000,000 Barbados dollars divided by 284,644 people gives us a per capita income of 29,721 Barbados dollars.
If using a calculator, remember you can leave off the six zeroes in GDP. Divide 8,460 by 284,644, then multiply your answer by 1,000,000 to put back the six zeroes.
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Convert the per capita income in Barbados dollars to per capita income in US dollars. Divide 29,721 (per capita income in Barbados dollars) by the exchange rate (2 Barbados dollars = 1 US dollar). Barbados per capita GDP is approximately 14,861 US dollars.
Problem 2:
Provenance: Jeffrey Sarbaum, University of North Carolina at Greensboro
Reuse: This item is offered under a Creative Commons Attribution-NonCommercial-ShareAlike license http://creativecommons.org/licenses/by-nc-sa/3.0/ You may reuse this item for non-commercial purposes as long as you provide attribution and offer any derivative works under a similar license.
The US spends a portion of its budget on foreign aid.
- US annual GDP was $17,000,000,000,000
- The US Federal government budget is $4,000,000,000,000
- The US spends $37,000,000,000 on aid to other countries
Does the US spend a lot of money on foreign aid?
The best answer to this question is "it depends on the units of analysis". In one sense yes, $37 billion is a lot of money. In dollar amounts, the US provides more foreign aid than any other country in the world. However:
Problem 3:
Provenance: Peter Schuhmann, University of North Carolina-Wilmington
Reuse: This item is offered under a Creative Commons Attribution-NonCommercial-ShareAlike license http://creativecommons.org/licenses/by-nc-sa/3.0/ You may reuse this item for non-commercial purposes as long as you provide attribution and offer any derivative works under a similar license.
Use the monthly sales data shown here to calculate a sales index, using January 2012 as the base period. How much higher were sales in July 2012 compared to January 2012?
To calculate an index:
- Divide every month's sales amount by sales in the base period. This gives you a ratio of each month's sales as compared to sales in the base period.
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Provenance: Peter Schuhmann, University of North Carolina-Wilmington
Reuse: This item is offered under a Creative Commons Attribution-NonCommercial-ShareAlike license http://creativecommons.org/licenses/by-nc-sa/3.0/ You may reuse this item for non-commercial purposes as long as you provide attribution and offer any derivative works under a similar license.
Multiply these ratios by 100 to create your index as a percent.
- The value of the index in July is 118.02, which means that sales were 18.02 percent higher in July than in January.
Because the value of the index in the base year is always 100, looking at the index values makes understanding changes in sales from the base period straightforward: simply subtract 100 from the index value to find the percentage change.
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