🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Economics
1
answer
0
watching
120
views

1.Consider an economy in which only food, clothing, and computers are produced. The established market basket is the following: 300 food, 40 clothing, 1 computer.

Quantities

  

Prices

Food

Clothing

Computers

Food

Clothing

Computers

5000

600

50

$4

$20

$600

5500

700

75

$5

$22

$500

 

 

Year

2013

2014

 

Using 2014 as the base year, calculate:

a)The nominal GDP in 2013 and 2014, as well as the nominal GDP growth rate.

b)The real GDP in 2013 and 2014, as well as the real GDP growth rate.

c)The GDP deflator in 2013 and 2014, as well as the GDP deflator inflation rate.

d)Calculate the CPI in 2013 and 2014, as well as the CPI inflation rate.

Watch
1
answer
0
watching
120
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Chika Ilonah
Chika IlonahLv10
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

karaoke machine karaoke machine CDs CDs
year quantity Price Quantity Price
2013 20 $50 100 $15
2014 30 $90 150 $20

a. Calculate CPI and compute the inflation rate of CPI. Use 2013 as the base year, and fix the basket at 1 karaoke machines and 3 CDs.

b. Calculate GDP deflator and compute the inflation rate using GDP deflator. Also use 2013 as the base year.

c. Is the inflation rate in 2014 the same using the two methods? Explain why or why not.

Consider a simple economy that only produces two goods; apples and oranges. The following table shows prices and quantities over a 3 year period.

 

Price of

Quantity of

Price of

Quantity of

YEAR

Apples

Apples

Oranges

Oranges

2012

2

20

1

10

2013

3

24

2

12

2014

4

30

3

20

Use the information from the previous table to fill out the following table:

   

Real GDP

GDP

YEAR

Nominal GDP ($)

(The base year 2012)($)

Deflator

2012

      

2013

      

2014

      

Choose one from each:

From 2013 to 2014, nominal GDP (increased or decreased) and real GDP (increased or decreased).

The inflation rate in 2014 was (10%, 40.6%, 29.4%, -28.9%, or -9.1%).

Why is real GDP a more accurate measure of an economy’s production than nominal GDP?

Answer the following questions: Use these data to answer the associated questions. Be sure to answer the questions as completely as you can. If calculations are requested, show your work! 

Action Items 2000 2001 2002 2003 2004

Nominal GDP 9817 10128 10469.6 10971.2 11734.3

Real GDP 9817 10320.6 10755.7

GDP Deflator 100 102.4 104.2

Growth rate of nominal GDP 3.2% 4.8% 

Growth rate of real GDP  1.6%  4.2%

CPI 172.2 177.1 179.9 184 188.9

Inflation rate using GDP deflator 2.4%  2.0% 

Inflation rate using CPI  1.58%  2.7%

1. How is the real GDP calculated from the given data? Fill in the missing values of real GDP in the table.

2. How is the growth rate of GDP calculated from the given data? Fill in the missing values of the growth rate of nominal and real GDP in the table.

3. What's the difference between nominal GDP and real GDP? Which one is better for measuring economic well-being?

4. How is the GDP Deflator calculated from the data given? Fill in the missing values of GDP deflator in the table.

5. Explain how to calculate the annual inflation rate.

6. What's the key difference between these two measures of inflation?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in