124.) Consider a world in which there are just three goods: teepees, tobacco, and corn. Listed below are the prices and quantities of these goods produced in the base year and in the current year. All Goods Sold in USAll Goods Sold in US Goods Consumed by Typical ConsumerGoods Consumed by Typical Consumer Base YearCurrent Year Base YearCurrent YearTeepees price44 48 quantity200200 52Tobacco price43 43 quantity0200 05Corn price28 48 quantity300200 1510 Using the GDP Deflator calculation, between the base year and the current year there has been Inflation of approximately 25% Deflation of approximately –20% Inflation of approximately 50% No change in the price level

The GDP deflator, Nominal GDPReal GDP×100 Nominal GDP measures the monetary value of the economies…

Answered: Consider a world in which there are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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124.) Consider a world in which there are just three goods: teepees, tobacco, and corn. Listed below are the prices and quantities of these goods produced in the base year and in the current year.

		All Goods Sold in US	All Goods Sold in US	Goods Consumed by Typical Consumer	Goods Consumed by Typical Consumer
		Base Year	Current Year	Base Year	Current Year
Teepees
	price	4	4	4	8
	quantity	200	200	5	2
Tobacco
	price	4	3	4	3
	quantity	0	200	0	5
Corn
	price	2	8	4	8
	quantity	300	200	15	10

Using the GDP Deflator calculation, between the base year and the current year there has been

		Inflation of approximately 25%
		Deflation of approximately –20%
		Inflation of approximately 50%
		No change in the price level

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