Answered: Explain 2 reasons using real GDP…

Business

Economics

Explain 2 reasons using real GDP calculation is based on the price level rather than output level.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 12RQ: Why do economists use index numbers to measure the price level rather than dollar value of goods?

See similar textbooks

Similar questions

The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?
Why do economists use index numbers to measure the price level rather than dollar value of goods?
Question 3) GDP, based on a problem from “Principles of Economics” by N. Gregory MankiwThe economy produces two goods, pineapples and smoke detectors. Information on productionand prices is presented in the table below. Year Price of Pineapples Quantity of Pineapples Price of Smoke Detectors Quantity of Smoke Detectors 1 6 950 100 45 2 4 1400 120 50 3 5 1200 110 55 4 6 1100 110 60 a) For each year, calculate the nominal GDP, the real GDP, and the GDP deflator. Use year 1 asthe base year.b) Calculate the percentage change in real GDP from year 1 to year 2, from year 2 to year 3, andfrom year 3 to year 4. Which year was the best for the economic well-being of the country?c) For each year, calculate the contribution of pineapple industry to real GDP (the share of realGDP that comes from the production of pineapples).d) Using GDP deflator, calculate the inflation rate. Which year had the highest inflation rate?e) The price of smoke detectors increased from $100 in year 1 to…
Question 3) GDP, based on a problem from “Principles of Economics” by N. Gregory MankiwThe economy produces two goods, pineapples and smoke detectors. Information on productionand prices is presented in the table below. Year Price of Pineapples Quantity of Pineapples Price of Smoke Detectors Quantity of Smoke Detectors 1 6 950 100 45 2 4 1400 120 50 3 5 1200 110 55 4 6 1100 110 60 a) For each year, calculate the nominal GDP, the real GDP, and the GDP deflator. Use year 1 asthe base year.b) Calculate the percentage change in real GDP from year 1 to year 2, from year 2 to year 3, andfrom year 3 to year 4. Which year was the best for the economic well-being of the country?c) For each year, calculate the contribution of pineapple industry to real GDP (the share of realGDP that comes from the production of pineapples).d) Using GDP deflator, calculate the inflation rate. Which year had the highest inflation rate?e) The price of smoke detectors increased from $100 in year 1 to…
2. What are the main components of measuring GDP with what is demanded?
Solve all this question compulsory........
2. Table 1 shows the current GDP Data and real GDP for the year 2013 to 2015. Current GDP RM175 bilion RM189 bilion RM201 bilion True/Right GDP deflator RM175 biljon RM183 bilion RM185 bilion, Year Inflation rate 2013 100 2014 2015 a. Fill in the blanks for the deflection and infusion rate for 2014 and 2015. Show your calculation path b. The following is an equation of consumption functions for a 2 sector economy. C = 90 + 0.75Y and Y = 360 i) Draw the usage function curve and mark A at the equilibrium point i) Draw the savings function curve and and mark B at the equilibrium point m) Assuming the household consumption increases by RM180, what is the value of the new income and mark C at the new equilibrium point for the consumption function and D at the new equilibrium point for the investment function.
question b)i,ii and iii
Look at the cost of producing a cell phone on the graphic provided. Which of the following will be calculated in this country's GDP? A)Intermediate costs and the final cost. B) All labor costs will be added. C) The outer case and keyboard. D) The cost of the final product.
Examine the status of the economic welfare in Goodland Republic in 2018 based onyour GDP deflator, nominal GDP and Real GDP. Also, explain the reasons why it isnecessary to calculate real GDP. Show your work. table given in the image section
Statement i Nominal GDP uses current prices to place a value on economy's production goods and services.Statement 2 real GDP uses constant base year prices to place value on economy's production of government goods and services a)Both statements are incorrect B)Both statement are correct Tco and statements in next Statement 1t stand tenement court
This economy only produces two goods apples and TV. For the years 1997 and 1998 the quantities are prices are shown. The base year is 1997. 1. Calculate the total value of good and services at current prices in this economy for 1997 and 1998. 2. Calculate the total value of good and service at constant prices in this economy for 1997 and 1998. 3. Calculate the GDP deflator in 1998. 4. Calculate the growth rate of real GDP in 1998. 5. Calculate the growth rate of nominal GDP in 1998. 6. Calculate the CPI for 1997. 7. Calculate the inflation rate for both 1997 and 1998.