Macroeconomics
13th Edition
ISBN: 9781337617444
Author: Roger A. Arnold
Publisher: Cengage
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Chapter 7, Problem 4WNG
To determine
Estimate the value of Real
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In year 1 and year 2, there are two products produced in a given economy, computers and bread. Suppose that there are no intermediate goods. In year 1, 20 computers are produced and sold at $1,000 each, and in year 2, 25 computers are sold at $1,500 each. In year 1, 10,000 loaves of bread are sold for $1.00 each, and in year 2, 12,000 loaves of bread are sold for $1.10 each.
(a) Calculate nominal GDP in each year.
(b) Calculate real GDP in each year, and the percentage increase in real GDP from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method.
(c) Calculate the implicit GDP price deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method.
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 %
%
%
In year 1 and year 2, there are two products produced in a given economy: computers and bread. Suppose that there are no intermediate goods. In year 1, 20 computers are produced and sold at $1600 each, and in year 2,
28 computers are produced and sold at $2880 each. In year 1, 20,000 loaves of bread are sold for $4 each, and in year 2, 26,000 loaves of bread are sold for $4.40 each.
a. Nominal GDP in year 1 is $ and nominal GDP in year 2 is $ . (Round your responses to the nearest integer as needed.)
b. Calculate real GDP in each year and the percentage increase in real GDP from year 1 to year 2 by using year 1 as the base year. Next, do the same calculations by using the chain-weighting method.
Using year 1 as the base year, real GDP in year 1 is $,
real GDP in year 2 is $
and the percentage increase in real GDP from year 1 to year 2 is %. (Round responses for real GDP to the nearest integer as needed,
and round your response for the percentage increase to three decimal places as…
Chapter 7 Solutions
Macroeconomics
Ch. 7.1 - Prob. 1STCh. 7.1 - Prob. 2STCh. 7.2 - Prob. 1STCh. 7.2 - Prob. 2STCh. 7.2 - Prob. 3STCh. 7.4 - Prob. 1STCh. 7.4 - Prob. 2STCh. 7.4 - Prob. 3STCh. 7 - Prob. 1QPCh. 7 - Prob. 2QP
Ch. 7 - Prob. 3QPCh. 7 - Prob. 4QPCh. 7 - Prob. 5QPCh. 7 - Prob. 6QPCh. 7 - Prob. 7QPCh. 7 - Prob. 8QPCh. 7 - Prob. 9QPCh. 7 - Prob. 10QPCh. 7 - Prob. 11QPCh. 7 - Prob. 12QPCh. 7 - Prob. 13QPCh. 7 - Prob. 14QPCh. 7 - Prob. 1WNGCh. 7 - Prob. 2WNGCh. 7 - Prob. 3WNGCh. 7 - Prob. 4WNGCh. 7 - Prob. 5WNGCh. 7 - Prob. 6WNGCh. 7 - Prob. 7WNGCh. 7 - Prob. 8WNGCh. 7 - Prob. 9WNGCh. 7 - Prob. 10WNGCh. 7 - Prob. 11WNG
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- Suppose that in the nation state of Craiglandia there are 2 final goods produced in the economy – food and clothing. Suppose the economy produces 10 units of food and 5 units of clothing in 2000 (the base year), and 10 units of food and 10 units of clothing in 2015. Further suppose the price of food was $2.00 per unit in 2000, and $3.00 per unit in 2015; whereas the price of clothing was $2.00 in 2000 and $2.00 in year 2015. What was the nominal GDP for Craiglandia in 2015? What was the real GDP for Craiglandia in 2015? The GDP deflator for Craiglandia, for 2015, is _______; and it follows that Craiglandia experienced _______between 2000 and 2015.arrow_forwardThere are two economies: Mexico and the United States. On year 1, the Mexican economy produced $3000 billion dollars worth of goods and services. In that same year the U.S. economy produced $16,000 billion dollars of goods and services. From year 1 to year 2 the Mexican economy grew at 6% and the U.S. economy grew at 2.5%. This means that in year 2 the Mexican economy produced $ than it did in year 1, and that the U.S. economy produced $ and services more than it did in year 1. Fill in the correct numbers in the correct sequence from the choices below. 1.800; 4,000 18.000; 40,000 The answer is different from the other answers provided. 18:40 180; 400 billion more billion in goodsarrow_forwardSuppose 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 nominal GDP in year 1? Year 1 - the output combination is - 3 quarts of ice cream, 1 bottle of shampoo, and 3 jars of peanut butter. Year 2, the output combination changes to 5 quarts of ice cream, 2 bottles of shampoo, and 2 jars of peanut butter. The prices in both years are $4 per quart for ice cream, $3 per bottle of shampoo, and $2 per jar of peanut butter Therefore, GDP in year 1 was $21 [= (3 x $4) + (1 x $3) + (3 x $2)]. Recall that GDP is the core measure of an economy's health. Nominal GDP (also known as current–dollar economic statistics) is not adjusted to account for any price changes.…arrow_forward
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