MGEA06H3 Study Guide - Final Guide: Gdp Deflator

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From 2011 Past Exam
Question 3 Question 5: Macroland consumes 4 goods (apples, pens, DVD, and
bread). Households purchases all apples and bread, one-third (⅓) of pens and half
(50%) of the DVD. The remaining (consumption of) pens and DVD are equally split
between firms and the government. In addition, half of the bread is imported from
foreign countries, while the remaining goods are produced locally.
The following table shows the quantities of goods consumed and their prices. The
Statistics Department of Macroland chooses 2010 as the base year.
2009
2010
Good
Quantity
Price
Quantity
Price
Apples
175
$3
200
$2
Pens
150
$4
150
$4.5
DVD
50
$35
60
$40
Bread
10
$8
10
$10
Question 3
What is the GDP deflator in 2009 (rounded to 2 decimal places)?
A) 87.23 B) 94.56 C) 94.80 D) 95.04 E) 95.17
F) 99.75 G) 100 H) 100.26 I) 105.49 J) 114.63
Question 4
Find the consumer price index in 2009 (rounded to 2 decimal places).
A) 136 B) 113.79 C) 100.80 D) 100.26 E) 100
F) 99.74 G) 99.70 H) 94.80 I) 94.75 J) 94.56
Question 5
Based on your answer in Questions 3 & 4, the GDP deflator and the CPI in Macroland
are different in 2009 because:
I) The basket used in computing the GDP deflator and the CPI are different.
II) The set of prices used to compute the GDP deflator and the CPI are different.
III) The effect of a change in price of bread has a larger impact on the CPI than
the GDP deflator.
A) Only I B) Only II C) Only III D) I & II E) I & III
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Document Summary

Question 3 question 5: macroland consumes 4 goods (apples, pens, dvd, and bread). Households purchases all apples and bread, one-third ( ) of pens and half (50%) of the dvd. The remaining (consumption of) pens and dvd are equally split between firms and the government. In addition, half of the bread is imported from foreign countries, while the remaining goods are produced locally. The following table shows the quantities of goods consumed and their prices. Statistics department of macroland chooses 2010 as the base year. What is the gdp deflator in 2009 (rounded to 2 decimal places): 87. 23, 99. 75. Find the consumer price index in 2009 (rounded to 2 decimal places): 136, 99. 74. Based on your answer in questions 3 & 4, the gdp deflator and the cpi in macroland are different in 2009 because: 113. 79, 99. 70, 100. 80, 94. 80, 100. 26, 94. 75, 95. 17, 114. 63, 100, 94. 56. The basket used in computing the gdp deflator and the cpi are different.

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