Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, theprice of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumerspurchased more potato chips and fewer popcorn than usual. This price change would most likely causeO a. No change to either the CPI or GDP deflatorO b. A larger change in the CPI than in the GDP deflatorOc. An equal change in the CPI and GDP deflatorO d. A larger change in the GDP deflator than in the CPIA consumer is endowed with some capital, which they can use to produce output according to the productionfunction y = k". They can divide that output between consumption now or save it as capital for next period. Theyhave a utility function given by U(cj,c2) = In(c) + 99 In(c2). For which of the following values of a will theconsumer want to save the largest percent of their output?O a. 2Ob. .5OC. Their saving rate does not depend on ad. 8In a Solow model with no population growth and no technology growth, an increase in the saving rate will causeO a. An increase in steady state consumptionO b. A decrease in steady state consumptionO c. We cannot answer the question without more informationo d. No change in steady state consumption

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Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator Ob. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in the CPI

Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator Ob. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in 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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3. Suppose an economy has two years worth of data, years 1 and 2. Sup- pose there are also two goods, bread and corn. Suppose, in year one, 30 units of corn are sold at a price of 1 $ and 20 units of bread are sold at a price of 2 S. Suppose in year two, 60 units of corn are sold at a price of 1.5 $ and 80 units of bread are sold at a price of 4 $. Compute nominal GDP in both periods. Compute real GDP under both defini tions of a base year. Compute also a chain weighted real GDP series. For all three measures, compute the GDP deflator