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GDP and inflation: Consider an economy that produces and consumes haircuts and cars. The next table contains data on two different years 2000 Price of a car $50,000 Price of a hair cut $10 Number of cars 100 Number of haircuts 500,000 2020 $60,000 $20 120 400,000 (a) Compute the following indicators for each year using 2000 as your base year: nominal GDP, real GDP and the GDP deflator. (b) How much did prices go up between 2000 and 2020? What has been the annual inflation rate?

GDP and inflation: Consider an economy that produces and consumes haircuts and cars. The next table contains data on two different years 2000 Price of a car $50,000 Price of a hair cut $10 Number of cars 100 Number of haircuts 500,000 2020 $60,000 $20 120 400,000 (a) Compute the following indicators for each year using 2000 as your base year: nominal GDP, real GDP and the GDP deflator. (b) How much did prices go up between 2000 and 2020? What has been the annual inflation rate?

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
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GDP and inflation: Consider an economy that produces and consumes haircuts and cars. The next table contains data on two different years Price of a car Price of a hair cut 2000 $50,000 $10 2020 $60,000 $20 120 Number of cars 100 Number of haircuts 500,000 400,000 (a) Compute the following indicators for each year using 2000 as your base year: nominal GDP, real GDP and the GDP deflator. (b) How much did prices go up between 2000 and 2020? What has been the annual inflation rate?
Transcribed Image Text:GDP and inflation: Consider an economy that produces and consumes haircuts and cars. The next table contains data on two different years Price of a car Price of a hair cut 2000 $50,000 $10 2020 $60,000 $20 120 Number of cars 100 Number of haircuts 500,000 400,000 (a) Compute the following indicators for each year using 2000 as your base year: nominal GDP, real GDP and the GDP deflator. (b) How much did prices go up between 2000 and 2020? What has been the annual inflation rate?
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