5. Real versus nominal GDPConsider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over athree-year period.PriceYear (Dollars per beer)201920202021242Year201920202021BeersUse the information from the preceding table to fill in the following table.Nominal GDP(Dollars)8951.170870Quantity(Number of beers)215135150Real GDP(Base year 2019, dollars)From 2020 to 2021, nominal GDPThe inflation rate in 2021 wasPriceQuantity(Dollars per enamel pin) (Number of enamel pins)333GDP Deflatorand real GDPEnamel pins155210190 Why is real GDP a more accurate measure of an economy's production than nominal GDP?Real GDP includes the value of exports, but nominal GDP does not.Real GDP is not influenced by price changes, but nominal GDP is.Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

GDP or gross domestic product determines the sum of the values of all end commodities produced…

5. Real versus nominal GDP Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per beer) 2019 2020 2021 2 4 Year 2019 2020 2021 2 Beers 870 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2019, dollars) 895 1,170 From 2020 to 2021, nominal GDP The inflation rate in 2021 was Quantity (Number of beers) 215 135 150 Price Quantity (Dollars per enamel pin) (Number of enamel pins) 155 210 190 3 3 GDP Deflator and real GDP Enamel pins

5. Real versus nominal GDP Consider a simple economy that produces two goods: beers and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per beer) 2019 2020 2021 2 4 Year 2019 2020 2021 2 Beers 870 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2019, dollars) 895 1,170 From 2020 to 2021, nominal GDP The inflation rate in 2021 was Quantity (Number of beers) 215 135 150 Price Quantity (Dollars per enamel pin) (Number of enamel pins) 155 210 190 3 3 GDP Deflator and real GDP Enamel pins

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6) The following table describes the economic activities of a hypothetical economy in a given year. Calculate the value-added at each step of the economic activities and its contribution to GDP. Item Seller Buyer Price ($) Value added ($) Kilogram of Lemons Famer Factory 6. Liter of lemon juice Factory Restaurant 10 Liter of lemon juice used as salad dressing Restaurant Consumers 16
1. A simple economy produces three commodities: beer, cheese, and popcorn. The following data shows total production for this economy in 1999 and 2000: Beer Cheese Popcorn 1999 2000 1999 Quantity 200 300 100 1999 2000 Using 1999 as the base year, complete the following table for the economy: Nominal GDP (a) (b) Nominal GDP Real GDP 10,000 (1) (c) (d) 1999 Price $ 6.00 7.00 7.00 Real GDP (2) (3) GDP Price Index (e) (f) 2000 Quantity 200 300 100 Inflation Growth rate of rate nominal GDP 2. Complete the following table for a simple economy, assuming that 1999 is the base year: GDP Price (g) Index (4) (5) Inflation rate 2000 Price $7.00 9.00 9.00 --- (h) 5% Growth rate of real GDP Growth rate of nominal GDP (6) (i) Growth rate of real GDP 5%
3. In a small community, breakfast is the most important meal of the day. Therefore, the only two goods that this community produces are coffee and scones in the following amounts: Year 2020 2021 Quantity 60 cups 90 cups Coffee Price $1.25 $1.45 Quantity 45 units 65 units Scones Price $2.10 $3.95 a) Calculate the inflation rate for 2021 using the GDP deflator method (assume that 2020 is the base year for real GDP calculations). Show your work. b) Calculate the inflation rate for 2021 using the CPI method (assume that 2020 is the base year for CPI calculations). Additionally, assume that the consumption basket for both years contains only 10 cups of coffee and 40 scones. Show your work. c) Compare the results of both inflation calculations and explain why they are similar or different based on the two methods and on the specific data used in this example.
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5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period. Year 2018 2019 2020 Cupcakes Year 2018 2019 2020 Price (Dollars per cupcake) 1 2 4 Quantity (Number of cupcakes) 120 130 130 Price (Dollars per eraser) 1 Erasers 4 4 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2018, dollars) GDP Deflator and real GDP Quantity (Number of erasers) 195 From 2019 to 2020, nominal GDP The inflation rate in 2020 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? ● Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes. 195 145 ● Real GDP is not influenced by price changes, but nominal GDP is. Real GDP includes the value of exports, but nominal GDP does not.
Using the table below, Pear Phone Year Price (S) Quantity Price (S) Quantity 2015 3 210 450 54 2016 4 200 500 50 14. Compute nominal GDP in each year. 15. By what percentage did the nominal GDP change between 2015 and 2016? 16. Compute real GDP each year by using "2015" as the base year. 17. By what percentage did real GDP change between 2015 and 2016? 18. By using the table and your answers to #15, and #17, explain (in one or two paragraphs) why "real GDP" is better than "nominal GDP" in measuring the production activity of an eçonomy. LA
The Table shows the GDP deflator for the year 2019 and nominal GDP of Fairyland for the years 2019 and 2020. You are told that prices in Fairyland rose by 5% in 2020 Calculate the percentage increase in Real GDP in 2020. Year GDP deflator Nominal GDP 2019 120 $240000 2020 Not given $277200 According to the U.S. Bureau of Labour Statistics a bread cost $5 in the year 1997 and cost $10.26 in 2022. Imagine your salary was $100 in 1997 and $250 in 2022. How much % has your real salary grown in terms of bread?
Product A B For the given data, calculate the following: a. Nominal GDP for all the years b. Real GDP for all the years C. GDP Deflator for all the years C Quantity (2017) 45 54 Price (2017) Quantity Price (2018) Quantity (2018) (2019) BD 14 BD 3 58 63 36 BD 20 Note: Use 2017 as the base year in your calculation. 36 BD 16 BD 3-5 BD 25 63 72 45 Price (2019) BD 18 BD 3.75 BD 30
4. Calculate the Nominal GDP, Real GDP using 2019 as the base year, and the GDP Deflator. Year Quantity of Milk 100 Price of Honey $4 $4 Price of Milk Quantity of Honey $2 $4 2017 200 2018 100 210 2019 $4 120 $6 220
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