11. Kaplan is an island country. It produces fertilizer, oil press, rice, bean, and oil, while exports oil and imports avocado from Mexico. The price (P, by $) and quantities (Q) of each product are as the following: Year Fertilizer Oil press Rice Bean Oil Avocado P P P 2016 5 100 1000 10 1000 15 200 80 30 70 10 2017 6 110 1200 12 1100 18 220 96 33 84 11 2018 120 1400 7 14 1200 21 240 150 36 98 12 Farmers will keep 1/2 of rice for their own consumption. For oil producers, they use bean and oil press to produce oil, keep 1/3 oil for themselves, sell 1/3 oil in domestic market, and export the rest. The CPI basket is {2 rice, 0.5 oil, 0.5 avocado}. 1) Finish the following table about the goods and its quantity that should be included in the GDP calculation. Also indicate the component of GDP that each good belongs to. GDP component I Oil press Year P 2016 1000 5 2017 1200 2018 1400 7 2) Use 2017 as the base year, the real GDP in 2017 is and the real GDP in 2018 is 3) Use 2017 as the base year, the inflation rate from 2017 to 2018 by CPI is
11. Kaplan is an island country. It produces fertilizer, oil press, rice, bean, and oil, while exports oil and imports avocado from Mexico. The price (P, by $) and quantities (Q) of each product are as the following: Year Fertilizer Oil press Rice Bean Oil Avocado P P P 2016 5 100 1000 10 1000 15 200 80 30 70 10 2017 6 110 1200 12 1100 18 220 96 33 84 11 2018 120 1400 7 14 1200 21 240 150 36 98 12 Farmers will keep 1/2 of rice for their own consumption. For oil producers, they use bean and oil press to produce oil, keep 1/3 oil for themselves, sell 1/3 oil in domestic market, and export the rest. The CPI basket is {2 rice, 0.5 oil, 0.5 avocado}. 1) Finish the following table about the goods and its quantity that should be included in the GDP calculation. Also indicate the component of GDP that each good belongs to. GDP component I Oil press Year P 2016 1000 5 2017 1200 2018 1400 7 2) Use 2017 as the base year, the real GDP in 2017 is and the real GDP in 2018 is 3) Use 2017 as the base year, the inflation rate from 2017 to 2018 by CPI is
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:11. Kaplan is an island country. It produces fertilizer, oil press, rice, bean, and oil, while
exports oil and imports avocado from Mexico. The price (P, by $) and quantities (Q) of
each product are as the following:
Year
Fertilizer
Oil press
Rice
Вean
Oil
Avocado
P
P
2016
100
1000
5
10
1000
15
200
80
30
70
10
2017
110
1200
6.
12
1100
18
220
96
33
84
11
2018
7
120
1400
7
14
1200
21
240
150
36
98
12
Farmers will keep 1/2 of rice for their own consumption. For oil producers, they use bean
and oil press to produce oil, keep 1/3 oil for themselves, sell 1/3 oil in domestic market,
and export the rest. The CPI basket is {2 rice, 0.5 oil, 0.5 avocado}.
1) Finish the following table about the goods and its quantity that should be included in
the GDP calculation. Also indicate the component of GDP that each good belongs to.
GDP component
I
Oil press
Year
P
P
2016
1000
2017
1200
6.
2018
1400
7
2) Use 2017 as the base year, the real GDP in 2017 is
and the real GDP in 2018 is
3) Use 2017 as the base year, the inflation rate from 2017 to 2018 by CPI is
4) Jay (borrower) met George (a banker) to borrow money in 2017. They expected that
the inflation rate by CPI method was 15% in the next year, and agreed on a nominal
interest rate of 20%. The expected real interest rate is
and the actual real
interest rate is
benefited from the borrowing because of the
unexpected inflation.
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