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-Explain why GDP is not a perfect metric for economic activity, and welfare.
-Suppose that the government sets price controls on some goods which are maximum prices at which these goods can be sold. Explain how these price controls can influence measuring GDP and the inflation rate.
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- A hypothetical country of Narnia produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown in the following table. The base year is 2017. Year 2016 2017 2018 2019 Price (Dollars per movie) 7.6% 7.5% Movies 7.2% 7% 10.00 11.00 12.00 12.00 Quantity Quantity (Movies) (Dollars per bag) (Bags) 500 600 650 625 Popcorn Refer to Table 23-5. What was the rate of inflation for Narnia in 2019? (Hint: round-off to the nearest decimal point) Price 5 4 5 6 1,000 900 950 925What is the relationship of the GDP deflator to real GDP? To make comparisons across time or across borders, one must use the notion of a GDP deflator to convert nominal GDP into real GDP for comparisons. Nominal variables are in current dollars and have price level changes such as inflation and deflation included in them. Real variables are in constant dollars due to the factoring out of price level changes using a base year and a deflator. What is the current nominal GDP for the US economy? What is the current real GDP for the US economy?The table contains price and quantity information for two vehicle models produced by Ford Motor Company, the F-series trucks and Escape SUVs. 2016 2016 2017 2017 price quantity price quantity ford escapes $24,485 307,069 $24,645 308,296 ford trucks $44,400 820,799 $24,645 896,764 a. Calculate the amount contributed by Ford to U.S. GDP (real and nominal) from the sales of the two models in 2016 and 2017. b. Determine the growth rate of nominal GDP (if Ford were the entire economy). c. Determine the growth rate of real GDP (if Ford were the entire economy).
- 3. In a small community, breakfast is the most important meal of the day. Therefore, the only two goods that this community produces are coffee and scones in the following amounts: Year 2020 2021 Quantity 60 cups 90 cups Coffee Price $1.25 $1.45 Quantity 45 units 65 units Scones Price $2.10 $3.95 a) Calculate the inflation rate for 2021 using the GDP deflator method (assume that 2020 is the base year for real GDP calculations). Show your work. b) Calculate the inflation rate for 2021 using the CPI method (assume that 2020 is the base year for CPI calculations). Additionally, assume that the consumption basket for both years contains only 10 cups of coffee and 40 scones. Show your work. c) Compare the results of both inflation calculations and explain why they are similar or different based on the two methods and on the specific data used in this example.GDP is a strong measure of the health of the economy, and it’s among the most important and widely reported economic data. · In your own words, summarize nominal GDP. · Discuss the limitations of gross domestic product (GDP) as a measurement tool. · What is the difference between real and nominal GDP? · Locate an online news article that discusses impacts to GDP in some way. Summarize the article and explain its relation to/impact on GDP. · Cite your sources.The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon. Year 1 Year 2 Good Quantity Price Quantity Price Milk 500 $2 900 $3 Butter 2000 $1 3000 $2 Between Year 1 and Year 2, the GDP deflator (based on Year 1 as a base year) rose Select one: a. 123.00%. b. 83.33%. c. 60.00%. d. 81.25%.
- Consider the table below price level 90 100 110 120 130 140 YAD YAS 1100 750 1000 825 900 900 800 975 700 1050 600 1125 what is the price level and the GDP at equilibrium? express as (GDP, price level) Your answer plot the graph for price level vs. GDP1. Which of the following are included in this year’s GDP? Explain your answer in each. A 2-hour decrease in the length of the workweek. The purchase of an AT&T corporate bond. A $2 billion increase in business inventories.2015 2016 2017 P Q P Q P Q Onion 1,2 400 1,5 600 2,5 400 Tomato 1 320 2,5 200 4 400 Pepper 4 50 12 50 14 50 Assume that there are only 3 goods produced in the economy. As seen in the table above, price(P) and quantity(Q) of goods are given for each year. Base year is 2016. According to this, Calculate nominal GDP for each year Calculate real GDP for each year Calculate the growth rate for the years 2016 and 2017 Calculate the inflation in 2016 and 2017 by using GDP deflator
- Imagine that the United States produces only three goods: apples, bananas, and carrots. The quantities produced and the prices of the three goods are listed below: Goods Apples Bananas Carrots Quantities Produced Prices ($) 7 2.00 10 24 1.00 1.50 Instructions: Round your answers to two decimal places. a. U.S. GDP is: $ b. Suppose that a drought hits the state of Washington. This drought causes the quantity of apples produced to fall to 4. Assuming that all prices remain constant, the new U.S. GDP is: $ c. Assume, once again, that the quantities produced and the prices of the three goods are as listed in the table. Now, given this situation, carrot sellers decide that the price of carrots is too low, so they agree to raise the price. If the U.S. GDP is $70.00, the new price of carrots is: $ per carrot.d. What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work. e. What was the inflation rate for 2010? For 2011? Show and briefly discuss your work Chapter 11 Problem 8: Remember to show all work and briefly discuss your results. The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period. Discuss your results Month Price of Meat Price of Potatoes January February $3.50 $1.50 $3.38 $0.60 March $4.00 $1.40 Calculate the cost of a basket of goods for each month. а. Calculate the consumer price index (CPI) for February and March. b. Calculate the inflation rate for February? с. What is the percentage change of price for the two goods from January to March? d. 5 LSSuppose that the British economy produces two goods: laptops and books. The quantity produced and the prices of these items for 2015 and 2016 are shown in the table below. Year 2015 2016 Quantities Produced Laptops 50 Books 1,000 Laptops 90 Books ? Price ($) Laptopa Books 7 Laptops 170 Books B 200 Instructions: In part a, round your answer to two decimal places. In part b, enter your answer as a whole number. In part c, round your answer to one decimal place. a. Let's assume that the base year was 2015, so that real GDP in 2015 equals nominal GDP in 2015. If the real GDP in Britain was $15,000 in 2015, the price of books was: $[ b. Using your answer from part (a), if the growth rate in nominal GDP was 15% | books must have been produced in 2016. Using your answers from parts (a) and (b), the growth rate in real GDP between 2015 and 2016 was: %