2. Consider an economy that produces only two types of fruits: mangos and bananas. The production and price for the base year (a few years ago) and the current year are as follows: Fruit Mango Banana Base Year Quantity 10 bags 22 bags Price $4 per bag $1 per bag Current Year Quantity 12 bags 24 bags Price $5 per bag $1.5 per bag a. Compute nominal GDP in the current year and in the base year. What is the percentage increase since the base year? b. Compute real GDP in the current year and in the base year. By what percentage does real GDP increase from the base year to the current year? c. Assume that the expenditure base to compute the CPI is base-year quantities. Calculate the CPI (Price Index) in both years and the inflation rate using the CPI.

2. Consider an economy that produces only two types of fruits: mangos and bananas. The production and price for the base year (a few years ago) and the current year are as follows: Fruit Mango Banana Base Year Quantity 10 bags 22 bags Price $4 per bag $1 per bag Current Year Quantity 12 bags 24 bags Price $5 per bag $1.5 per bag a. Compute nominal GDP in the current year and in the base year. What is the percentage increase since the base year? b. Compute real GDP in the current year and in the base year. By what percentage does real GDP increase from the base year to the current year? c. Assume that the expenditure base to compute the CPI is base-year quantities. Calculate the CPI (Price Index) in both years and the inflation rate using the CPI.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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During 2009, the leather company produced enough leather for 20 couches. The couch manufacturing company bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2010. The couch manufacturing company produced 16 couches during 2009 and sold each one during that year for $3,000. What was the contribution to GDP for 20097 Select one: a, $68,000 O'b. $48,000 Oc. $52,000 O đ. $64,000
5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period. Year 2017 2018 2019 Year 2017 2018 2019 Cupcakes Price (Dollars per cupcake) 1 2 Quantity (Number of cupcakes) 110 140 100 Use the information from the preceding table to fill in the following table Nominal GDP Real GDP (Dollars) (Base year 2017, dollars) Price (Dollars per eraser) 1 Erasers GDP Deflator Quantity (Number of erasers) 180 210 190
3. Calculate real GDP (billion $) with a GDP deflator of 1.25 if the nominal GDP for the year has grown by 50 billion $ and amounted to 1,000 billion $. 56 > >I 8O 00 1708 W
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9. Assume that below is some data from an economy that produces Rugby Balls and Apples. Year Price of Rugby Quantity Balls (in OMR) Rugby (units) of Price of Apples Quantity of Apples Balls Balls (in OMR) Balls (in tons) 2018 10 105 4 30 2019 15 95 35 a. Calculate Nominal GDP for each year. b. Calculate Real GDP for each year by considering 2018 as a Base Year. c. What was the growth rate of Real GDP between 2018 and 2019? d. Did economic well-being increased or decreased from year 2018 to 2019? e. Compute the GDP Deflator for each Year. 10. Graphically show and explain the effect of the followings on the Steady State in Solow Growth Model, (Graph should be properly labelled and clearly drawn)
2. GDP Year Price of Tacos 2020 $1 2021 $1 2022 $2 Quantity of Price of Tacos Pizza 100 150 200 $5 $6 $8 Quantity of Pizza 50 50 100 a. Given the data above for a local economy, compute nominal GDP. real GDP, and the GDP deflator for each year, using 2020 as the base year. ( b. Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in 2021 and 2022 from the preceding year. c. Did economic well-being increase more in 2021 or 2022? Explain.
5. An economy produces three goods: laptops, Apple phones, and plums. Production units and prices per unit for years 2020 and 2021 are as follows: 2020 2021 Quantity Price($) | Quantity Price($) Laptops Apple Phones Plums 10 2,000 12 3,000 4 1,000 6. 500 1,000 1 1,000 1 a. What is nominal GDP in 2020 and in 2021? b. Using 2020 as the base year, what is real GDP in 2020 and in 2021? c. What is the percentage increase in real GDP from 2020 to 2021? d. Repeat b. using 2021 as the base year. e. Does the growth rate for real GDP depend on which year is chosen as the base year?
3. Consider an economy that only produces mittens. In Year 1, 4000 pairs of mittens are produced and the price is $5 per pair. In the Year 2, 5000 pairs of mittens are produced and the price is $7 per pair. In Year 3, 7000 pair of mittens are produced and the price is $9 per pair. Use Year 1 as the base year. What is the nominal GDP for each year? What is the real GDP for each year? What is the GDP deflator for each year? What is the percentage growth rate of real GDP from year 2 to year 3? What is the inflation rate (as measured by the GDP deflator) from year 2 to year 3?
5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and erasers. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes Erasers Price Quantity Price Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per eraser) (Number of erasers) 2015 1 110 1 180 2016 2 140 4 210 2017 4 100 4 190 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP Year (Dollars) (Base year 2015, dollars) GDP Deflator 2015 2016 2017 From 2016 to 2017, nominal GDP and real GDP
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2. Which of the following variables is independent of the choice of base year? a. Nominal GDP b. Real GDP c. GDP Deflator d. none of the above
1. Those are the production numbers for 3 different years for country B Year Price of Quantity of bananas kg. Quantity of backrubs Price of Bananas $ backrubs $ 1.00 6.00 1.00 5 6.00 7 3 2.00 10 6.00 9 Calculate real and nominal GDP for year 1, 2 and year 3 when base year is year 1. b. Calculate GDP with Chain weighted method for period 3. Compare the result with the a. answer in part a.