ECON 4710 Chapter : Problem Set 1
Document Summary
Econ 4710 aggregate economic analysis, spring 2012. Suggested answers to problem set 1: we have the following data on the goods traded/consumed in the economy. It is easy to compute the nominal gdp. The only thing we need to be careful is that gdp only includes the market values of all goods produced domestically. As we saw in the class, the real gdp is computed by using the base- year (2009) prices. For year t, the real gdp is calculated by. Papple, 2009 qapple,t + pcar, 2009 qcar,t. Then, the gdp deflator can be easily computed as the ratio of the nominal gdp to the real gdp. As a result, we will get the following results: (1) 2011: suppose that the consumption backset for cpi calculation consists of. 20 apples, 1 unit of car, and 10 units of oil. Calculate the cpi index (base year = 2009) and the corresponding rate of inflation for each year.
