Problem #3 SHOW ALL MATH>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fill in the blanks on this table:
Nominal GDP Price level Real GDP
Year (billions) index (billions)
1959 494.2 25.6 1,930.4
1964 648.0 _____ 2,339.4
1967 814.3 30.3 2687.4
1973 1,349.6 41.3 3267.7
1978 2,232.7 _____ 3,702.7
1988 4,900.4 _____ 4,716.5
1991 5,724.8 117.6 4868.0
Problem #3 SHOW ALL MATH>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fill in the blanks on this table:
Nominal GDP Price level Real GDP
Year (billions) index (billions)
1959 494.2 25.6 1,930.4
1964 648.0 _____ 2,339.4
1967 814.3 30.3 2687.4
1973 1,349.6 41.3 3267.7
1978 2,232.7 _____ 3,702.7
1988 4,900.4 _____ 4,716.5
1991 5,724.8 117.6 4868.0
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Related questions
1. Consider an economy that produces oranges and boomerangs. The prices and quantities of these goods in two different years are reported in the table below. Fill in the missing entries
2016 | 2017 | % change of 2016-2017 | |
quantity of oranges | 100 | 105 | ? |
quantity of boomerangs | 20 | 22 | ? |
price of oranges (dollars) | 1 | 1.10 | ? |
price of bommerangs (dollars | 3 | 3.10 | ? |
Nominal GDP | ? | ? | ? |
Real GDP in 2016 prices | ? | ? | ? |
Real GDP in 2017 prices | ? | ? | ? |
Real GDP in chained prices | ? | ? | ? |
2. Consider the economy from the above problem 1.^ Calculate the inflation rate for the 2016â2017 period using the GDP
deflator based on the Laspeyres, Paasche, and chain-weighted indexes of GDP.
3. Indian GDP in 2010 was 78.9 trillion rupees, while U.S. GDP was $14.5 trillion. The exchange rate in 2010 was 45.7 rupees per dollar. India turns out to have lower prices than the United States (this is true more generally for poor countries): the price level in India (converted to dollars) divided by the price level in the United States was 0.368 in 2010.
(a) What is the ratio of Indian GDP to U.S. GDP if we donât take into account the differences in relative prices and simply use the exchange rate to make the conversion?
(b) What is the ratio of real GDP in India to real GDP in the United States in common prices?
(c) Why are these two numbers different?
Please no cursive or typed out
1. (65 points total).
a) (5 points) Fill in the Table below.
Number of workers | Units of output | MPN |
0 | 0 | |
1 | 20 | |
2 | 38 | |
3 | 53 | |
4 | 66 | |
5 | 77 | |
6 | 86 | |
7 | 93 |
b. (10 points) Define the marginal product of labor and explain how it relates to the production function (with N on horizontal axis and Y on vertical axis). What shape does a production function typically take and why? Does this production function take the 'typical' shape?
c)(5 points) Assume that you sell your output to Europe for a US price = $10. The exchange rate is this time is $1.07 per Euro. What is the price of your product in Euros? Please round to 2 decimal places.
d) (5 points) You can hire all the workers you want at $80 per worker. Along with the US price = $10, calculate the number of workers that you will hire and the associated profit in REAL terms (as we did in class, we 'assume away' all other costs of production). Please give me the marginal REAL profit of each worker hired and then add them up and that is the total profit in real terms.
e)(5 points) Inflation data in the US is weaker than the Fed would like and thus, expectations change such that the Fed is less likely to raise interest rates. As a result, the new and updated exchange rate is $1.23 per Euro. What has happened to the value of the US dollar and what is the new Euro price of your product, assuming that your American price stays at $10?
f).(5 points) Given the change in conditions you decide to raise the price of your product in US dollar terms so that the Euro price stays the same as it was before the change in the exchange rate (part c above). What is the new US dollar price? Please show all work.
g) (10 points) What has happened to the marginal revenue product (MRPN) for each worker (has it gone up or down?) and why given the change in price? Be sure to define what the marginal revenue product is and what it means in 'laypersons' terms.
h) (10 points) Given that the US$ price of your product has changed, explain how and why you would change your behavior. Please provide the intuition beginning your answer with... at the same level of labor input I am no longer ......... (please be as specific as possible). Again, explain in REAL terms, not nominal terms.
i. (5 points) Calculate the new level of profits in REAL terms given the change in condition including the change in the exchange rate, the change in the US $ price of your product. and the change in your behavior.
j)(5 points) The Fed has had its eye on inflation for a long time and have been disappointed in that inflation has been too low. Is the change in the value the dollar vs the Euro a welcome development for the Fed? Why or why not? Assume that these conditions changed in a similar way for many US firms.