Assume an economy in which only apple and orange are produced. In year 1, 200 million killograms of apple are produced and consumed and its price is$0.6 per kilogram, while 150 million killograms of orange are produced and consumed and its price is $0.7 per killogram. In year 2, 250 million kilograms ofapple are produced and consumed and its price is $0.7 per kilogram, while 300 million kilograms of orange are prduced and its price is $0.8 per kilogram.(Show the results upto 1 decimal point when required)(a) If the base year is year 1 then the GDP price deflator in year 2 is(b) If the base year is year 2 then the GDP price deflator in year 1 is(c) If the base year is year 1 then the inflation rate between years 1 and 2 is(d) If the base year is year 2 then the inflation rate between years 1 and 2 is(e) The chain weighted inflation rate between year 1 and year 2 is %(f) If the base year is year 1 then CPI inflation rate is %%%

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume an economy with a coal producer and a steel producer. In a given year, the coal producer produces 15 million tons of coal, selling for $5 a ton, and pays $50 million in wages. The steel producer uses 25 million tons of coal (10 of which are imported) as input to steel production, paying $5 per ton. The steel producer produces 10 million tons of steel, selling at $20 a ton. The steel producer pays $40 million in wages. All profits made by the coal and steel firm are distributed to domestic consumers. What is GDP in this economy? O 115 millions of dollars. O 150 millions of dollars. O 275 millions of dollars. O 365 millions of dollars.
*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.
Suppose that in 1994 the total output in a single-good economy was 7,000 buckets of chicken. Also suppose that in 1994 each bucket of chicken was priced at $15. Finally, assume that in 2015 the price per bucket of chicken was $20 and that 23,000 buckets were produced. Instructions: In parts a-b, enter your answer rounded to 1 decimal place. In part c, enter your answers as a whole number. a. What is the GDP price index for 1994, using 2015 as the base year? b. By what percentage did the price level, as measured by this index, rise between 1994 and 2015? percent c. What were the amounts of real GDP in 1994 and 2015? In 1994, real GDP = $ In 2015, real GDP = $
Each year, Johan typically does all his own landscaping and yard work. He spends $204 per year on mulch for his flower beds, $205 per year on flowers and plants, $55 on fertilizer for his lawn, and $246 on gasoline and lawn mower maintenance. The lawn and garden store where he obtains his mulch and fertilizer charges other customers $500 for the service of spreading that much mulch in flower beds and $49 for the service of distributing fertilizer over a yard the size of Johan's. Paying a professional yard care service to mow his lawn would require an expenditure of $1,299 per year, but in that case Johan would not have to buy gasoline or maintain hi: own lawn mower. a. In a normal year, calculate by how much does Johan's landscaping and yard work contribute to GDP $ b. Suppose that Johan has developed allergy problems this year and will have to reduce the amount of his yard work. He can wear a mask while running his lawn mower, so he will keep mowing his yard, but he will pay the lawn…
Consider an economy with two firms. Firm A produces cotton and firm B produces cotton swabs. In a given year, firm A produces 100,000 pounds of cotton, sells 40,000 pounds of cotton to firm B at $3 per pound, and exports 60,000 pounds of cotton at $3 per pound. Firm A pays $100,000 in wages to consumers. Firm B produces 50,000,000 cotton swabs, and sells 40,000,000 cotton swabs to domestic consumers at $0.04 per swab, and stores 10,000,000 cotton swabs as inventory. Firm B pays consumers $40,000 in wages. In addition to the 40,000,000 cotton swabs consumers buy from firm B, consumers import and consume 5,000,000 cotton swabs, and they pay $0.06 per cotton swab. a. Calculate GDP using 1. Production/value added approach 2. Expenditure approach
Assume an economy with a coal producer, a steel producer, and some consumers. (There is no government.) In a given year, the coal producer produces 15 million tonnes of coal and sells it for $5 per tonne. The coal producer pays $60 million in wages to consumers. The steel producer uses 40 million tonnes of coal as an input into steel production, all purchased at $5 per tonne. Of this, 15 million tonnes of coal comes from the domestic coal producer, and 25 million tonnes is imported. The steel producer produces 19 million tonnes of steel and sells it for $15 per tonne. Domestic consumers buy 11 million tonnes of steel, and 8 million tonnes are exported. The steel producer pays consumers $70 million in wages. All profits made by domestic producers are distributed to domestic consumers. a. Determine GDP using (i) the product approach, (ii) the expenditure approach, and (ii) the income approach. (1) Using the product approach, the value added by the coal producer is $million, the value…
Assume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 50,000 bushels of wheat, sells 20,000 bushels to firm B at $3 per bushel, exports 25,000 bushels at $3 per bushel, and stores 5,000 bushels as inventory. Firm A pays $50,000 in wages to consumers. Firm B produces 50,000 loaves of bread, and sells all of it to domestic consumers at $2 per loaf. Firm B pays consumers $20,000 in wages. In addition to the 50,000 loaves of bread consumers buy from firm B, consumers import and consume 15,000 loaves of bread, and they pay $1 per loaf for this imported bread. Calculate gross domestic product for the year using the product approach.
In year 1 and year 2, there are two products produced in a given economy, computers and bread. Suppose that there are no intermediate goods. In year 1, 20 computers are produced and sold at $1,000 each, and in year 2, 25 computers are sold at $1,500 each. In year 1, 10,000 loaves of bread are sold for $1.00 each, and in year 2, 12,000 loaves of bread are sold for $1.10 each. (a) Calculate nominal GDP in each year. (b) Calculate real GDP in each year, and the percentage increase in real GDP from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method. (c) Calculate the implicit GDP price deflator and the percentage inflation rate from year 1 to year 2 using year 1 as the base year. Next, do the same calculations using the chain-weighting method.
Use the following information to answer questions 3-5. Suppose that in the nation state of Craiglandia there are 2 final goods produced in the economy - kitten chow and kitty litter. Suppose the economy produces 20 units of kitten chow and 5 units of kitty litter in 2000 (the base year), and 21 units of kitten chow and 8 units of kitty litter in 2015. Further suppose the price of kitten chow was $2.50 per unit in 2000, and $3.00 per unit in 2015; whereas the price of kitty litter was $2.00 in 2000 and $1.00 in 2015. The GDP deflator for Craiglandia, for 2015, is and it follows that Craiglandia experienced between 2000 and 2015.
Suppose that consumers purchase fish and computer chips. In 2010, 1 pound of fish cost $1, a computer chip cost $1, and the typical consumer bought 10 pounds of fish and 10 computer chips. In 2011, 1 pound of fish cost $2, a computer chip cost $0.50, and the typical consumer bought 5 pounds of fish and 20 computer chips. In 2012, 1 pound of fish cost $2.10, a computer chip cost $0.90, and the typical consumer bought 12 pounds of fish and 20 computer chips. Using 2011 as the base year, the inflation rate between 2011 and 2012 is _____ percent.
Suppose that in the nation state of Craiglandia there are 2 final goods produced in the economy – food and clothing. Suppose the economy produces 10 units of food and 5 units of clothing in 2000 (the base year), and 10 units of food and 10 units of clothing in 2015. Further suppose the price of food was $2.00 per unit in 2000, and $3.00 per unit in 2015; whereas the price of clothing was $2.00 in 2000 and $2.00 in year 2015. What was the nominal GDP for Craiglandia in 2015? What was the real GDP for Craiglandia in 2015? The GDP deflator for Craiglandia, for 2015, is _______; and it follows that Craiglandia experienced _______between 2000 and 2015.
Please note I have completed some of this myself, however I need you to finish it up. Thanks! Suppose that annual output in year 1 in a 3-good economy is 3 quarts of ice cream, 1 bottle of shampoo, and 3 jars of peanut butter. In year 2, the output mix changes to 5 quarts of ice cream, 2 bottles of shampoo, and 2 jars of peanut butter. If the prices in both years are $4 per quart for ice cream, $3 per bottle of shampoo, and $2 per jar of peanut butter, what was the economy’s nominal GDP in year 1? Show the calculation. Year one (3*$4)+(1*$3)=$12+$3+$6=$21 Recall that GDP is the core measure of an economy's health. Nominal GDP (also known as current–dollar economic statistics) is not adjusted to account for any price changes. To calculate nominal GDP (the value of all final goods and services evaluated at current-year prices) you have to use the formula: Nominal GDP= P*Q. To get a real picture of a nation's economic growth economists prefer using real GDP. To calculate real…

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