Suppose that there are only two goods produced in an economy: haircuts and banking services. Now suppose that banking services in year 2 are not the same as banking services in year 1. Year 2 banking services include telebanking, which year 1 banking services did not include. The technology for telebanking was available in year 1, but the price of banking services with telebanking in year 1 was $17, and no one chose to purchase this package. However, in year 2, the price of banking services with telebanking was $16, and everyone chose to have this package (i.e., in year 2 no one chose to have the year 1 banking services package without telebanking). Prices, quantities, and the number of workers occupied in the production of each good for year 1 and for year 2 are given in the table below: P₁ 12 12 17 Year 1 Q₁ 110 200 0 W₁ 60 60 0 214 14 16 P₂ Year 2 110 0 230 W₂ 60 0 70 Haircut Banking (no telebanking) Banking (with telebanking) Using year 1 prices, real GDP in year 2 is $ The growth rate of real GDP is%. (Round your response to two decimal places.) The rate of inflation using the GDP deflator is%. (Round your response to two decimal places and include a minus sign if necessary.) Using year 1 prices, real GDP per worker in year 1 is $ (Round your response to two decimal places.) Using year 1 prices, real GDP per worker in year 2 is $. (Round your response to two decimal places.) Labor productivity growth between year 1 and year 2 for the whole economy is%. (Round your response to two decimal places.) (Round your response to the nearest dollar.)
Suppose that there are only two goods produced in an economy: haircuts and banking services. Now suppose that banking services in year 2 are not the same as banking services in year 1. Year 2 banking services include telebanking, which year 1 banking services did not include. The technology for telebanking was available in year 1, but the price of banking services with telebanking in year 1 was $17, and no one chose to purchase this package. However, in year 2, the price of banking services with telebanking was $16, and everyone chose to have this package (i.e., in year 2 no one chose to have the year 1 banking services package without telebanking). Prices, quantities, and the number of workers occupied in the production of each good for year 1 and for year 2 are given in the table below: P₁ 12 12 17 Year 1 Q₁ 110 200 0 W₁ 60 60 0 214 14 16 P₂ Year 2 110 0 230 W₂ 60 0 70 Haircut Banking (no telebanking) Banking (with telebanking) Using year 1 prices, real GDP in year 2 is $ The growth rate of real GDP is%. (Round your response to two decimal places.) The rate of inflation using the GDP deflator is%. (Round your response to two decimal places and include a minus sign if necessary.) Using year 1 prices, real GDP per worker in year 1 is $ (Round your response to two decimal places.) Using year 1 prices, real GDP per worker in year 2 is $. (Round your response to two decimal places.) Labor productivity growth between year 1 and year 2 for the whole economy is%. (Round your response to two decimal places.) (Round your response to the nearest dollar.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that there are only two goods produced in an economy: haircuts and banking services. Now suppose that
banking services in year 2 are not the same as banking services in year 1. Year 2 banking services include telebanking,
which year 1 banking services did not include. The technology for telebanking was available in year 1, but the price of
banking services with telebanking in year 1 was $17, and no one chose to purchase this package. However, in year 2,
the price of banking services with telebanking was $16, and everyone chose to have this package (i.e., in year 2 no one
chose to have the year 1 banking services package without telebanking).
Prices, quantities, and the number of workers occupied in the production of each good for year 1 and for year 2 are
given in the table below:
Haircut
Banking (no telebanking)
Banking (with telebanking)
P₁
12
12
17
Year 1
Q₁
110
200
0
W₁
60
60
0
P₂
14 14 16
Year 2
Q₂
110
0
230
W₂
60
0
70
Using year 1 prices, real GDP in year 2 is $. (Round your response to the nearest dollar.)
The growth rate of real GDP is%. (Round your response to two decimal places.)
The rate of inflation using the GDP deflator is %. (Round your response to two decimal places and include a minus
sign if necessary.)
Using year 1 prices, real GDP per worker in year 1 is $
(Round your response to two decimal places.)
Using year 1 prices, real GDP per worker in year 2 is $
(Round your response to two decimal places.)
Labor productivity growth between year 1 and year 2 for the whole economy is%. (Round your response to two
decimal places.)
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