The tables below show data for two island nations, Arturia and Ringberg. Arturia Year 1 2 Nominal GDP Population GDP $100 $240 Deflator 100 120 20 25 (a) Calculate each of the following for Year 2. Show your work. (i) Real GDP per capita for Arturia (ii) Real GDP per capita for Ringberg Ringberg (c) Calculate each of the following in Year 2. Show your work. (i) The inflation rate in Arturia (ii) The inflation rate in Ringberg Year 1 2 Nominal GDP Population GDP Deflator $200 $300 100 150 25 25 (b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2? Explain.

The tables below show data for two island nations, Arturia and Ringberg. Arturia Year 1 2 Nominal GDP Population GDP $100 $240 Deflator 100 120 20 25 (a) Calculate each of the following for Year 2. Show your work. (i) Real GDP per capita for Arturia (ii) Real GDP per capita for Ringberg Ringberg (c) Calculate each of the following in Year 2. Show your work. (i) The inflation rate in Arturia (ii) The inflation rate in Ringberg Year 1 2 Nominal GDP Population GDP Deflator $200 $300 100 150 25 25 (b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in Year 2? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The tables below show data for two island nations, Arturia and Ringberg.
Arturia
Year
1
2
Nominal GDP Population
GDP
$100
$240
Deflator
100
120
20
25
(a) Calculate each of the following for Year 2. Show your work.
(i) Real GDP per capita for Arturia
(ii) Real GDP per capita for Ringberg
Ringberg
(c) Calculate each of the following in Year 2. Show your work.
(i) The inflation rate in Arturia
(ii) The inflation rate in Ringberg
Year
1
2
Nominal GDP Population
GDP
$200
$300
Deflator
100
150
25
25
(b) If Arturia and Ringberg have the same velocity of money in Year 2, which nation must have the higher money supply in
Year 2? Explain.
(d) Based on your answer to part (c), if the nominal interest rate is the same for both nations in Year 2, which nation
experiences the higher real interest rate in Year 2? Explain.
(e) Ringberg produces consumer goods and capital goods. While maintaining full employment, Ringberg decides to
allocate more resources to the production of consumer goods. What will be the effect on the long-run economic growth
rate in Ringberg? Explain.

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