Hi attached is problem one that supplements problem 2 could you please answer problem 2 2. Use the information in Problem 1 about the economy of Fruitopia. Suppose that the Bureauof Labor Statistics of Fruitopia calculates the CPI using a fixed basket of goods: 8 bushels ofapples and 6 bushels of oranges.a. Calculate CPI in 2020 and 2021, with 2017 as the base year (the value of the fixed basket in2017 is $30). What was the percentage increase in the price level from 2020 to 2021 accordingto the CPI?b. Based on the information in Problem 1, calculate the GDP deflator for 2021. What was thepercentage increase in the price level from 2020 to 2021 according to the GDP deflator?(Hint: see Chapter 5 of your textbook.)c. Compare your answers to parts (a) and (b). Comment. Pg.)Econ Hw # 44/1/22Quantity Praduced Cin millions of busbels)Apples). Givenovanges20263020213321bushel in fruitopiaoxanges prices Cim dollars per bushel]6iven Prices of apples and eranges perApples202020213.la) caleulate nominal GDp in 2020 ond 2021(30.2)+ (1804)= Go+72=\132nominal 6DP 20205132 millionnominal 6DP 2021 33.3) +21•5)= 99+ 10s=,$204 millionit/2064b) calculate real GDP in 2020 #+ 2021 o 2020 is base yeart i)since 2020 is base year prices are fixed at 2020 pricesreal GOP 2020 →(30.2) +(18.4) = 60 +72 = 132$ 132 million(33•2) +(2104) = 66+84=150real GOP 2021→$150 millionO ind Percentaue Growth othominalFormulas Ain nominal GOPrreal GOP from 2020202.204-132nominut• 100 →72o100• \00base year 6DP132132:percentage Growth of nominal GOP from 2020→2021L54.54%64.54%Same for real GDP Just use nin real GDP150-13218• 100100 13.63%132132cPercentage Growth of real 6DP from 2020 202113.63%

For 2020,Cost of market basket=(Quantity of apples×Price of apples)+(Quantity of oranges×Price of…

2. Use the information in Problem 1 about the economy of Fruitopia. Suppose that the Bureau of Labor Statistics of Fruitopia calculates the CPI using a fixed basket of goods: 8 bushels of apples and 6 bushels of oranges. a. Calculate CPI in 2020 and 2021, with 2017 as the base year (the value of the fixed basket in 2017 is $30). What was the percentage increase in the price level from 2020 to 2021 according to the CPI? b. Based on the information in Problem 1, calculate the GDP deflator for 2021. What was the percentage increase in the price level from 2020 to 2021 according to the GDP deflator? (Hint: see Chapter 5 of your textbook.) c. Compare your answers to parts (a) and (b). Comment.

2. Use the information in Problem 1 about the economy of Fruitopia. Suppose that the Bureau of Labor Statistics of Fruitopia calculates the CPI using a fixed basket of goods: 8 bushels of apples and 6 bushels of oranges. a. Calculate CPI in 2020 and 2021, with 2017 as the base year (the value of the fixed basket in 2017 is $30). What was the percentage increase in the price level from 2020 to 2021 according to the CPI? b. Based on the information in Problem 1, calculate the GDP deflator for 2021. What was the percentage increase in the price level from 2020 to 2021 according to the GDP deflator? (Hint: see Chapter 5 of your textbook.) c. Compare your answers to parts (a) and (b). Comment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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