2 Arturia Year 1 2 Nominal GDP GDP Deflator $100 $240 100 120 Population 20 25 Ringberg Year 1 2 (a) Calculate each of the following for Year 2. Show your work. (1) Real GDP per capita for Arturia (ii) Real GDP per capita for Ringberg Nominal (c) Calculate each of the following in Year 2. Show your work. (1) The inflation rate in Arturia (ii) The inflation rate in Ringberg GDP $200 $300 GDP Population Deflator 100 150 25 25 (b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2? Explain. (d) Based on your answer to part (c), if the nominal interest rate is the same for both nations in Year 2, which nation experiences the higher real interest rate in Year 2? Explain. (e) Ringberg produces consumer goods and capital goods. While maintaining full employment, Ringberg decides to allocate more resources to the production of consumer goods. What will be the effect on the long-run economic growth rate in Ringberg? Explain.

2 Arturia Year 1 2 Nominal GDP GDP Deflator $100 $240 100 120 Population 20 25 Ringberg Year 1 2 (a) Calculate each of the following for Year 2. Show your work. (1) Real GDP per capita for Arturia (ii) Real GDP per capita for Ringberg Nominal (c) Calculate each of the following in Year 2. Show your work. (1) The inflation rate in Arturia (ii) The inflation rate in Ringberg GDP $200 $300 GDP Population Deflator 100 150 25 25 (b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2? Explain. (d) Based on your answer to part (c), if the nominal interest rate is the same for both nations in Year 2, which nation experiences the higher real interest rate in Year 2? Explain. (e) Ringberg produces consumer goods and capital goods. While maintaining full employment, Ringberg decides to allocate more resources to the production of consumer goods. What will be the effect on the long-run economic growth rate in Ringberg? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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