corregido - bono segundo examen

8/9/2019 CORREGIDO - Bono Segundo Examen

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Universidad de Puerto Rico

Recinto de Río Piedras

Facultad de Ciencias Sociales

Departamento de Economía

Nombre_______________________ ECON 3022

Prof. Rosario Rivera Negrón, PhD(C)

BONO SEGUNDO EXAMEN

Lea el artículo “Economy at its lowest in 4 years” y conteste las siguientes preguntas:

1. De acuerdo al artículo, ¿Cuáles componentes del PIB tuvieron un efecto positivo en el

crecimiento económico total? ¿Cuáles tuvieron un efecto negativo en el crecimiento económico total?

2. Dada la información en el artículo, ¿Cuál sería su estimado del crecimiento del PIB Nominal para el

último trimestre del 2006?

3. Utilizando el concepto del flujo circular, discuta cómo los cambios en el mercado de trabajo

están relacionados al gasto de consumo (C) y al PIB



Economy At Its Slowest In 4 Years

By EDUARDO PORTER AND JEREMY W. PETERS – April 28, 2007

Economic growth slowed to its weakest pace in four years during the first three monthsof 2007, underscoring how the persistent slump in the housing market continued toserve as a drag on the American economy.

In its first estimate of economic growth for the quarter, the Commerce Department said

the nation’s gross domestic product, the most comprehensive measure of overalleconomic activity, expanded 1.3 percent for the quarter, barely over half the raterecorded in the final quarter of last year.

The abrupt slowdown was not enough to put a brake on inflation, however. Theconsumer price index most carefully monitored by the Federal Reserve, which excludesfood and energy, rose 2.2 percent in the quarter, at an annual rate, above the Fed’sstated comfort ceiling.

’’It’s sort of more inflation, less growth,’’ said Stuart Hoffman, chief economist of PNCFinancial. ’’That’s not a tasty combination.’’

On Wall Street, economists had forecast a slide in growth, but not one this sharp. Thedollar plunged against the euro, briefly falling to a record low as investors factored inexpectations of faster growth and rising interest rates in Europe against low growth and

the possibility of lower rates in the United States.

But bond yields rose slightly, indicating deeper concern about potentially higherinflation. Stocks -- which have risen almost uninterruptedly since early March, defyingconcerns over a potential economic weakening -- ended mixed.

Economists said that the latest report card left the Fed in even more of a quandary overinterest rates, with a weaker economy prodding it to cut rates to stimulate growth butinflationary pressures pushing it toward higher rates to curb price increases. The endresult is likely to be a decision by the central bank to keep rates where they are until a

clearer picture emerges.

’’It’s a bugaboo for the Fed,’’ said John Silvia, chief economist at the Wachovia

Corporation, the bank holding company. ’’It is a difficult spot to be in.’’

As throughout much of last year, the housing slump was the biggest anchor on the

economy. Home construction recorded its sixth consecutive quarterly decline, falling 17percent at an annual rate and subtracting almost a full percentage point from G.D.P.

Still, there were several upbeat signals in the economic report that suggested to manyeconomists that the pace of growth could pick up this year. Business investment



rebounded from its slowdown late last year to expand at a 2 percent annual rate in thefirst quarter. Silicon Valley was a key to the revival: investment in information

technology contributed more than half a percentage point to growth in the quarter.

And despite the worrisome state of housing, Americans continued to borrow and buy. Inthe first quarter consumer spending grew 3.8 percent, a fairly vigorous pace.

But economic weakness also spread beyond housing. After a sharp cut in inventories inthe fourth quarter of last year, businesses slimmed their stockpiles a little more in thefirst quarter of 2007, shaving 0.3 percentage points from economic growth. A decline inmilitary spending by the government trimmed a quarter of a percentage point percentfrom total output.

Trade provided the biggest surprise, when exports fell unexpectedly and imports

continued growing, subtracting half a percentage point from economic growth,according to the report.

Economists pointed out that the preliminary data on trade is particularly sketchybecause the government did not yet have a good handle on exports and imports inMarch. But the data bewildered some analysts, who pointed out that the combination of a weak dollar and faster growth in Europe and elsewhere should be providing a lift toexports.

’’We completely discount this number,’’ said Nariman Behravesh, chief economist at

Global Insight of Lexington, Mass. ’’It’s inconsistent with everything else going on in theworld.’’

He suggested the estimate for first-quarter exports could be revised upward. And if not,he predicted, exports should record a sharp upswing in the spring quarter that is under

way now.

The weakness in the economy and the poor trade results contributed to the dollar routearly in the trading day. And some analysts on foreign exchange markets argued that

the dollar could well continue its long fall against key currencies like the euro and theBritish pound.

’’The divergence in monetary policy and economic growth between Europe and the U.S.is going to grease the wheels of those central banks who want to diversify their

reserves away from the U.S. dollar,’’ said Ashraf Laidi, chief foreign exchange analyst atCMC Markets U.S., a financial trading company.

And a number of economists noted several reasons for the expected slow growth incoming quarters. The main one is the possibility of weaker consumer spending.

’’Rapidly rising energy prices and falling consumer confidence suggest that consumption

growth will slow markedly in the second quarter,’’ Paul Ashworth, senior United Stateseconomist with Capital Economics, wrote in a research report.



Moreover, some experts forecast that the relatively strong job market of recent months-- unemployment has fallen to 4.4 percent and wage gains have outpaced inflation

despite weak growth -- will buckle soon and kink consumer spending.

’’Growth at this pace will loosen the labor market,’’ wrote Ian Shepherdson, chief UnitedStates economist at High Frequency Economics in Valhalla, N.Y., in a note to investors.

’’The Fed will blink soon.’’

But traders who try to divine the Fed’s actions were unmoved by the latest data.Futures markets put the chance that the Fed will cut interest rates from 5.25 percent to5 percent by the end of the year at around 90 percent, about the same as before thenew data was released.

Mr. Behravesh suggested Fed governors seem confident that the economy is growing at

an underlying, long-term rate of 2 to 2.5 percent, a rate at which they are comfortable.

Some economists even suggested that higher inflation might prompt the Fed to raise,

not cut, interest rates.

’’The Fed has seen inflation numbers creep steadily up in this cycle,’’ said Michael R.Englund, chief economist of Action Economics in Denver. ’’We’re going to see a first half of the year that is going to keep inflation pretty much above the Fed’s target zone.’’

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