Consider an economy that produces only four types of fruit: apples, oranges, pineapples, and bananas. In the base year (2012), the production and price data were as follows: Fruit Quantity Price Apples 3,000 bags $2 per bag Bananas 6,000 bunches $3 per bunch Pineapples 4,000 $1.5 per Oranges 8,000 bags $4 per bag In the current year(2013), the production and price data are follows: Fruit Quantity Price Apples 4,000 bags $3 per bag Bananas 14,000 bunches $2 per bunch Pineapples 7,500 $2 per Oranges 32,000 bags $5 per bag (a) Calculate the nominal GDP in the current year and the base year. What is the percentage increase since the base year? (b) Calculate the real GDP in the current year and the base year. By what percentage does real GDP increase from the base year to the current year? (c) Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?
Consider an economy that produces only four types of fruit: apples, oranges, pineapples, and bananas. In the base year (2012), the production and price data were as follows: Fruit Quantity Price Apples 3,000 bags $2 per bag Bananas 6,000 bunches $3 per bunch Pineapples 4,000 $1.5 per Oranges 8,000 bags $4 per bag In the current year(2013), the production and price data are follows: Fruit Quantity Price Apples 4,000 bags $3 per bag Bananas 14,000 bunches $2 per bunch Pineapples 7,500 $2 per Oranges 32,000 bags $5 per bag (a) Calculate the nominal GDP in the current year and the base year. What is the percentage increase since the base year? (b) Calculate the real GDP in the current year and the base year. By what percentage does real GDP increase from the base year to the current year? (c) Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
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
Chapter7: Taking The Nation's Economic Pulse
Section: Chapter Questions
Problem 14CQ
Related questions
Question
100%
Consider an economy that produces only four types of fruit: apples, oranges, pineapples, and bananas. In the base year (2012), the production and price data were as follows:
| Fruit | Quantity | Price |
| Apples | 3,000 bags | $2 per bag |
| Bananas | 6,000 bunches | $3 per bunch |
| Pineapples | 4,000 | $1.5 per |
| Oranges | 8,000 bags | $4 per bag |
| In the current year(2013), the production and price data are follows: | ||
| Fruit | Quantity | Price |
| Apples | 4,000 bags | $3 per bag |
| Bananas | 14,000 bunches | $2 per bunch |
| Pineapples | 7,500 | $2 per |
| Oranges | 32,000 bags | $5 per bag |
(a) Calculate the nominal GDP in the current year and the base year. What is the percentage increase since the base year?
(b) Calculate the real GDP in the current year and the base year. By what percentage does real GDP increase from the base year to the current year?
(c) Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?
(d) Would you say that the percentage increase in nominal GDP in this economy since the base year is due more to increases in prices or increases in the physical volume of output?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning