Suppose an economy consists of three goods, pizzas, movies, and lattes.  The goods have the following prices per unit and quantities produced over three different years:                   Price of Pizzas Quantity of pizza Price of lattes Quantity of lattes Price of Movies Quantity of movies 2019 $14.00 400   $5 1000   $7 600   2020 $14.25 500   $5.25 1100   $8 100   2021 $14.99 550   $6 1130   $8.00 500     a)How much is the nominal GDP each year?  At what rate does the economy grow in 2020 and 2021, year over year? b) How much is real GDP each year and at what rate does the economy grow? Use 2019 as the Base Year. c)Briefly interpret the two measures of GDP growth in each year

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Suppose that consumers purchase fish and computer chips. In 2010, 1 pound of fish cost $1, a computer chip cost $1, and the typical consumer bought 10 pounds of fish and 10 computer chips. In 2011, 1 pound of fish cost $2, a computer chip cost $0.50, and the typical consumer bought 5 pounds of fish and 20 computer chips. In 2012, 1 pound of fish cost $2.10, a computer chip cost $0.90, and the typical consumer bought 12 pounds of fish and 20 computer chips. Using 2011 as the base year, the inflation rate between 2011 and 2012 is _____ percent.

Consider a simple economy that produces two goods: pencils and muffins. The following table shows the prices and quantities of the goods over a three-year period. Year Pencils Muffins Price Quantity Price Quantity (Dollars per pencil) (Number of pencils) (Dollars per muffin) (Number of muffins) 2018 1 140 2 200 2019 2 125 4 220 2020 3 120 4 180   Use the information from the preceding table to fill in the following table. Year Nominal GDP Real GDP GDP Deflator (Dollars) (Base year 2018, dollars) 2018       2019       2020         From 2019 to 2020, nominal GDP    , and real GDP    .   The inflation rate in 2020 was    .   Why is real GDP a more accurate measure of an economy's production than nominal GDP? Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.   Real GDP measures the value of the goods and services an economy produces,…

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Assume an economy in which only apple and orange are produced. In year 1, 200 million killograms of apple are produced and consumed and its price is $0.6 per kilogram, while 150 million killograms of orange are produced and consumed and its price is $0.7 per killogram. In year 2, 250 million kilograms of apple are produced and consumed and its price is $0.7 per kilogram, while 300 million kilograms of orange are prduced and its price is $0.8 per kilogram. (Show the results upto 1 decimal point when required) (a) If the base year is year 1 then the GDP price deflator in year 2 is (b) If the base year is year 2 then the GDP price deflator in year 1 is (c) If the base year is year 1 then the inflation rate between years 1 and 2 is (d) If the base year is year 2 then the inflation rate between years 1 and 2 is (e) The chain weighted inflation rate between year 1 and year 2 is % (f) If the base year is year 1 then CPI inflation rate is % % %

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Page 550 1. Suppose that annual output in year 1 in a 3-good economy is 3 quarts of ice cream, 1 bottle of shampoo, and 3 jars of peanut butter. In year 2, the output mix changes to 5 quarts of ice cream, 2 bottles of shampoo, and 2 jars of peanut butter. If the prices in both years are $4 per quart for ice cream, $3 per bottle of shampoo, and $2 per jar of peanut butter, what was the economy's GDP in year 1? What was its GDP in year 2?

a. Consider an economy which produces and sells, among a host of other things, 100 million T‑shirts a year. The average T‑shirt begins life when a farmer plants seeds she put away last year, waters them, and harvests the cotton, then sells the cotton to a mill for $0.75, which sells the fabric to a T‑shirt factory for $1.50, which sells its T‑shirts to a wholesaler for $5, who sells it to Nordstrom for $10, which finally sells it to you for $17. Determine the impact of T‑shirts on annual GDP by calculating the value added of the entire production process. b. Now, calculate the amount spent on T‑shirts in a year if 100 million T‑shirts are sold, each for $17. How does this compare to the amount calculated through the value‑added method?

Explain the relationship between output and income for both an individual and an entire economy.