*4. Assume that a country produces only two goods, automobiles and fast PCs. In 1, automobiles cost $20,000 each and the PCs cost $3,000 each; 1,000 auto- mobiles and 10,000 PCs are produced. In price of automobiles has increased to $22,000; because a new, even faster type of PC is about to be intro- duced, the price of fast PCs has fallen to $700. In year 2, 1,000 automobiles and 15,000 PCs are produced. (a) Fill in the following table. year year 2, the
*4. Assume that a country produces only two goods, automobiles and fast PCs. In 1, automobiles cost $20,000 each and the PCs cost $3,000 each; 1,000 auto- mobiles and 10,000 PCs are produced. In price of automobiles has increased to $22,000; because a new, even faster type of PC is about to be intro- duced, the price of fast PCs has fallen to $700. In year 2, 1,000 automobiles and 15,000 PCs are produced. (a) Fill in the following table. year year 2, the
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter18: Gaining From International Trade
Section: Chapter Questions
Problem 1CQ
Related questions
Question
![*4. Assume that a country produces only two goods,
automobiles and fast PCs. In year 1, automobiles cost
$20,000 each and the PCs cost $3,000 each; 1,000 auto-
mobiles and 10,000 PCs are produced. In year 2, the
price of automobiles has increased to $22,000; because
a new, even faster type of PC is about to be intro-
duced, the price of fast PCs has fallen to $700. In year
2, 1,000 automobiles and 15,000 PCs are produced.
(a) Fill in the following table.
Year 1
Year 2
Nominal GDP
(Total of current-dollar
expenditures)
Real GDP
(i) at fixed year 1 prices
(ii) at fixed year 2 prices
(b) Using the technique of chain-weighting, calculate
the percentage change in real GDP between year 1
and year 2.
(c) Calculate the GDP deflator for year 2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdbf750ec-32a4-4ffd-a66d-94427cd892a1%2F9972d214-78b5-4f57-a3a2-2ecb0030753a%2Fkxiw8f4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:*4. Assume that a country produces only two goods,
automobiles and fast PCs. In year 1, automobiles cost
$20,000 each and the PCs cost $3,000 each; 1,000 auto-
mobiles and 10,000 PCs are produced. In year 2, the
price of automobiles has increased to $22,000; because
a new, even faster type of PC is about to be intro-
duced, the price of fast PCs has fallen to $700. In year
2, 1,000 automobiles and 15,000 PCs are produced.
(a) Fill in the following table.
Year 1
Year 2
Nominal GDP
(Total of current-dollar
expenditures)
Real GDP
(i) at fixed year 1 prices
(ii) at fixed year 2 prices
(b) Using the technique of chain-weighting, calculate
the percentage change in real GDP between year 1
and year 2.
(c) Calculate the GDP deflator for year 2.
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