5. Real versus nominal GDP Consider a simple economy that produces two goods: coffees and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Year 2020 2021 2022 Year 2020 2021 2022 Price (Dollars per coffee) 2 2 4 Coffees Quantity (Number of coffees) 295 Use the information from the preceding table to fill in the following table. From 2021 to 2022, nominal GDP The inflation rate in 2022 was 120 Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator Price (Dollars per enamel pin) and real GDP 4 Enamel pins 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of enamel pins) 195 225 180 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

5. Real versus nominal GDP Consider a simple economy that produces two goods: coffees and enamel pins. The following table shows the prices and quantities of the goods over a three-year period. Year 2020 2021 2022 Year 2020 2021 2022 Price (Dollars per coffee) 2 2 4 Coffees Quantity (Number of coffees) 295 Use the information from the preceding table to fill in the following table. From 2021 to 2022, nominal GDP The inflation rate in 2022 was 120 Nominal GDP Real GDP (Dollars) (Base year 2020, dollars) GDP Deflator Price (Dollars per enamel pin) and real GDP 4 Enamel pins 4 Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of enamel pins) 195 225 180 O Real GDP is not influenced by price changes, but nominal GDP is. O Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes. O Real GDP does not include the value of intermediate goods and services, but nominal GDP does.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
3. In a small community, breakfast is the most important meal of the day. Therefore, the only two goods that this community produces are coffee and scones in the following amounts: Year 2020 2021 Quantity 60 cups 90 cups Coffee Price $1.25 $1.45 Quantity 45 units 65 units Scones Price $2.10 $3.95 a) Calculate the inflation rate for 2021 using the GDP deflator method (assume that 2020 is the base year for real GDP calculations). Show your work. b) Calculate the inflation rate for 2021 using the CPI method (assume that 2020 is the base year for CPI calculations). Additionally, assume that the consumption basket for both years contains only 10 cups of coffee and 40 scones. Show your work. c) Compare the results of both inflation calculations and explain why they are similar or different based on the two methods and on the specific data used in this example.
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 2018 2019 2020 Cupcakes Year 2018 2019 2020 Price (Dollars per cupcake) 1 2 4 Quantity (Number of cupcakes) 120 130 130 Price (Dollars per eraser) 1 Erasers 4 4 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2018, dollars) GDP Deflator and real GDP Quantity (Number of erasers) 195 From 2019 to 2020, nominal GDP The inflation rate in 2020 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? ● Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes. 195 145 ● Real GDP is not influenced by price changes, but nominal GDP is. Real GDP includes the value of exports, but nominal GDP does not.
6. The following table shows the CPI for each year from 2009 to 2021 Year CPI 2009 172 2010 177 2011 189 2012 200 2013 212 2014 220 2015 220 2016 230 2017 250 2018 255 2019 270 2020 280 2021 300 (a) In 2010, I deposited $380 in by interest bearing saving account. In 2021, in my account I had $412 expressed in 2013 prices. What is the average annual nominal interest rate I earned on my deposit from 2010-2021? (b) In another account, I deposited $1200 in an interest bearing saving account in 2008. I held the money in the account from 2008-2014. The annual real interest rate I earned on the account was r = 0. How much did I have in my account in 2014 (the nominal value)
2015 2016 2017 P Q P Q P Q Onion 1,2 400 1,5 600 2,5 400 Tomato 1 320 2,5 200 4 400 Pepper 4 50 12 50 14 50 Assume that there are only 3 goods produced in the economy. As seen in the table above, price(P) and quantity(Q) of goods are given for each year. Base year is 2016. According to this, Calculate nominal GDP for each year Calculate real GDP for each year Calculate the growth rate for the years 2016 and 2017 Calculate the inflation in 2016 and 2017 by using GDP deflator
Page 551 7. The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data. Nominal GDP, Price Index Real GDP, Year Billions (2005 = 100) Billions 1968 $ 909.8 22.01 1978 2,293.8 40.40 $. 1988 5,100.4 66.98 1998 8,793.5 85.51 2008 14,441.4 108.48
Consider a simple economy that produces two goods: pens and mumins. The following table shows the prices and quantities of the gonds over a three- year period. Pens Muffins Price Quantity Price Quantity Year (Dollars per pen) (Number of pens) (Dollars per muffin) (Number of nmuffins) 2018 125 155 2019 135 3. 210 2020 125 165 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP Year (Dollars) (Base year 2018, dollars) GDP Deflator 2018 2019 2020 From 2019 to 2020, nominal GDP and real GDP The inflation rate in 2020 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. O Real GDP is not influenced by price changes, but nominal GDP is. O Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.
Use the information from the preceding table to fill in the following table. Year Nominal GDP Real GDP GDP Deflator 2018 410 410 100 2019 1170 585 200 2020 1080 480 225 From 2019 to 2020, nominal GDP (increase or decrease) , and real GDP (increase or decrease) . The inflation rate in 2020 was (-12.5%, 0.1%, 12.5%, 88.9%, 112.5%) .
Suppose demand and supply are given by: (LO3, LO4)Qx d = 14 −  1/2Px and Qx s = 1/4Px  − 1a. Determine the equilibrium price and quantity.
Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165
Consider a simple economy that produces two goods: stickers and seltzers. The following table shows the prices and quantities of the goods over a three-year period. Stickers Price Quantity Year (Dollars per sticker) (Number of stickers) 2018 2 265 2019 135 2020 135 2 2 Seltzers Price (Dollars per seltzer) 1 Quantity (Number of seltzers) 160 230 180 Use the information from the preceding table to fill in the following table. Nominal GDP Real GDP (Dollars) (Base year 2018, dollars) GDP Deflator Year 2018 2019 2020 From 2019 to 2020, nominal GDP The inflation rate in 2020 was 52 decreased ▼ , and real GDP increased Why is real GDP a more accurate measure or ah economy's production than nominal GDP? Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services…
5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Cupcakes Envelopes Price Quantity Price Quantity Year (Dollars per cupcake) (Number of cupcakes) (Dollars per envelope) (Number of envelopes) 2017 1 110 185 2018 155 200 2019 3 110 165 Use the information from the preceding table to fill in the folowing table. Nominal GDP Real GDP (Dollars) (Base year 2017, dollars) GDP Deflator Year 2017 2018 2019 From 2018 to 2019, nominal GDP and real GDP The inflation rate in 2019 was Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP is not influenced by price changes, but nominal GDP is. Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes. O Real GDP includes the value of exports, but nominal GDP does not.