n the figure, when the economy is in a long-run equilibrium, the price level will be A. 90. B. 110. C. 100. D. 120. Price level (GDP deflator, 2000-100) 130 28 & 120 110 100 LAS SAS AD 11.0 11.5 12.0 12.5 13.0 13.5 Real GDP (trillions of 2000 dollars)
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- A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2020 10 20 50 13 2021 15 30 60 15 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2020 as the base year, and fix the basket at 1 karaoke machine and 5.Consider an economy that only produces two goods: Boomerangs and Vegemite. Prices and quantities produced in two years are given by the following table: Price Boomerangs $5 Vegemite (in cans) $2 $613.800 $607.500 Year 1 $620.100 $605.573 Quantity 50 100 Compute Real GDP in year 2 by applying the Chain-Weighting approach. Use year 1 as the reference year. (Round your final and preliminary results using three decimal places.) Year 2 Price $6 $3 Quantity 80 110So far, we have learned to measure real GDP, but how do we end up with that real GDP? Of all of the different amountsof national income and price levels that might exist, how do we gravitate toward the one that gets measured each year asreal GDP?In short, it is the interaction of the buyers and producers of all output that determines both the national income (real GDP)and the price level. In other words, the intersection of aggregate demand (AD) and short-run aggregate supply (SRAS)determines the short-run equilibrium output and price level.Once we have a short-run equilibrium output, we can then compare it to the full employment output to figure out where inthe business cycle we are. If current real GDP is less than full employment output, an economy is in a recession. If currentreal GDP is higher than full employment output, an economy is experiencing a boom. If the current output is equal to thefull-employment output, then we say that the economy is in long-run equilibrium. The…
- A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2020 20 50 60 5 2021 21 70 80 6 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2020 as the base year, and fix the basket at 2 karaoke machines and 6 CDs.) Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is . (Note: Again, use 2020 as the base year.) Which of the following statements is correct? Check all that apply. The CPI allows the basket of goods and services to change. The GDP deflator allows the basket of goods and services to change. The inflation rate in 2021 is not the same using the two methods.A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2020 20 50 60 5 2021 21 70 80 6 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2020 as the base year, and fix the basket at 2 karaoke machines and 6 CDs.) Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is . (Note: Again, use 2020 as the base year.) Which of the following statements is correct? Check all that apply. The GDP deflator holds the basket of goods and services constant. The CPI holds the basket of goods and services constant. The inflation rate in 2021 is the same using the two methods.Consider the data in the following table, which represents the total production of the country Byzantium, a country that produces only consumer goods. Table 1: Byzantium 2018 2019 2020 Quantity of Y 100 105 103 Quantity of X 5 3 1 Price of Y $5 $5 $5 Price of X $100 $105 $110 1. Calculate the nominal GDP for all three years ( 2. Calculate real GDP for all three years, using 2018 as the base year 3. Calculate the GDP deflator, using 2018 as the base year. Identify whether there was inflation from the previous year (*
- Can you inform from the graph the movement of the price level in the economy since the beginning of 2021? Explain GDP Were we ever in a recession during the period? How do you know?What is the relationship of the GDP deflator to real GDP? To make comparisons across time or across borders, one must use the notion of a GDP deflator to convert nominal GDP into real GDP for comparisons. Nominal variables are in current dollars and have price level changes such as inflation and deflation included in them. Real variables are in constant dollars due to the factoring out of price level changes using a base year and a deflator. What is the current nominal GDP for the US economy? What is the current real GDP for the US economy?What is the new short-run price level? What is the new short-run GDP? What is the new Long-run price level? What is the new long-run GDP?
- A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100). Nominal GDP last year was $28,137 billion. Contracts on the futures markets are currently selling for $460. What is the market's prediction for nominal GDP this year? Put your answer in billions. You may round to two decimal places.Suppose that an economy produces two goods: laptops and books. The quantity produced and the prices of these items for 2019 and 2020 are shown in the table below: Year Quantities produced Price ($) Laptops = 60 = 220 Laptops ? Books 2019 Books = 1200 Laptops = 100 Books = ? Laptops = 200 2020 Books 8 = Instructions: Round your answer to two decimal places. a. Let's assume that the base year was 2019, so that real GDP in 2019 equals nominal GDP in 2019. If the real GDP was $18,000 in 2019, the price of books must have been $ Instructions: Round your answer to the nearest whole number. b. Using your answer from part (a), if the growth rate in nominal GDP was 15 percent, have been produced. books must Instructions: Round your answer to one decimal place. c. Using your answers from parts (a) and (b), the growth rate in real GDP between 2019 and 2020 was percent.A small nation of 10 people idolizes the TV show The Voice. All they produce and consume are karaoke machines and CDs, in the following amounts: Karaoke Machines CDs Quantity Price Quantity Price (Dollars) (Dollars) 2020 10 40 30 10 2021 12 60 50 12 Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is . (Note: Use 2020 as the base year, and fix the basket at 1 karaoke machine and 3 CDs.) Using a method similar to that used to calculate the GDP deflator, the percentage change of the overall price level is . (Note: Again, use 2020 as the base year.) Which of the following statements is correct? 1.The GDP deflator holds the basket of goods and services constant. 2.The inflation rate in 2021 is not the same using the two methods. 3. The CPI allows the basket of goods and services to change.
