Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 21, Problem 3.8P
To determine
To evaluate the statement that the rise in prices may lead to a fall in
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Evaluate the following statement: Even if the prices of a
large number of goods and services in the economy increase
dramatically, the real GDP for the economy can still fall.
Calculate total GDP for this economy given the
following components of supply. Round your
answer to the nearest tenth and enter the
value in trillions of dollars (i.e. $xx.x trillion).
of GDP on the Supply Side
(in trillions of dollars)
Components
Durable goods
Nondurable goods
Services
Structures
Change in inventories
Provide your answer below:
trillion
Total
3.8
2.7
12.2
2.1
0
?
Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburgers, shirts, and cotton. Further, assume that all of the cotton is
used to produce shirts.
Product
Shoes
Hamburgers
Shirts
Cotton
2020 Statistics
Price Quantity
$50.00
100
2.50
110
35.00
55
0.09 10,000
(round your answer to the nearest penny) and the real GDP for 2021 equals $ (round your answer to the nearest penny).
2012 Statistics
Quantity
90
80
60
11,000
Price
$60.00
2.50
30.00
0.08
2021 Statistics
Quantity Price
100 $65.00
125 2.75
75 30.00
0.07
11,000
a. If the base year is the year 2012, then real GDP for 2020 equals $
b. The (annual) growth rate of real GDP in 2021 is %. (Enter your response as a percentage rounded to two decimal places.)
Chapter 21 Solutions
Principles of Economics (12th Edition)
Knowledge Booster
Similar questions
- For the following questions, refer to the following scenario: Assume there are only two goods in the economy, apples and bananas. In 2018, 1,300 apples were sold at $1.50 each and 8,500 bananas at $2 each. In 2019, the price of apples rose to $2 and the quantity rose to 2,300; the price of bananas rose to $3 and the quantity sold rose to 8,600. Calculate real GDP in 2019 using 2018 as the base year.arrow_forwardA country has just one resource - labor - that it can use to produce two goods, books and clothing. At first the country has 10 million workers, and each worker can produce either 2 books or 5 units of clothing per day. Suppose the country wants to produce 8 million books. Suppose the price of a book is $10, and the price of a unit of clothing is $20. Using this information and your answer from the last question, calculate the country's GDP (measured in dollars per day). Enter your answer as a number in the space below. (For example, if your answer is $3.75 million, enter it as 3750000 in the space below.)arrow_forwardCalculate the equilibrium level of output (income) for the following economy: Consumption C = 1500+0.75Y Investment I = 500arrow_forward
- a) Calculate GDP Deflator of 2009. b) Calculate the Growth rate of real GDP of 2009. c) What can you conclude from your answer to part a. d) What can you conclude from your answer to part b. Please answer all and answer must be correct.arrow_forwardConsider a small country that produces and consumes only two goods: coffee and bananas. The quantity produced and price of each good in 2018 and 2019 are provided in the table below. Year 2018 Coffee Bananas Year 2019 Coffee Bananas The real GDP for year 2018 is: $ The real GDP for year 2019is: $ The growth of the real GDP is: Quantity % 650 pounds 300 pounds Quantity 700 pounds 330 pounds Price $5.5 per pound $0.4 per pound Assume that 2019 is the base year and round your response to two decimal places. (e.g. $963.45, 5.69%) The nominal GDP for year 2018 is: The nominal GDP for year 2019is: $ Price $6.0 per pound $0.5 per pound The GDP Deflator in 2018 is: The GDP Deflator in 2019 is: The inflation rate between the two years using the GDP deflator is. % Assume the average consumer buys 1 pound of coffee and 2 pounds of Bananas. Assume that 2019 is the base year and round your response to two decimal places. (e.g. $963.45, 5.69%) The consumer price index for 2018 is: The consumer price…arrow_forwardCalculate total GDP for this economy given the following components of demand. Round your answer to the nearest tenth and enter the value in trillions of dollars. Components of GDP on the Demand Side (in trillions of dollars) Consumption Investment Government spending Exports Imports Provide your answer below: trillion Total GDP 12.9 3.8 4.2 3.0 4.2 ?arrow_forward
- In problem 5, suppose that a flood destroys several potato farms and as a result supply decreases by 20 million bags a week at the same time as the new snack food comes onto the market. What is the new equilibrium price and quantity of chips? The table shows data from the United Kingdom in 2005. Item Billions of pounds Wages paid to labor 685 Consumption expenditure 791 Taxes 394 Transfer payments 267 Profits 273 Investment 209 Government expenditure 267 Exports 322 Saving 38 Imports 366 7. Calculate GDP in the United Kingdom. The transactions in Jupiter last year are in the table to the right. Calculate Jupiter’s aggregate expenditure. Calculate Jupiter’s net exports. Calculate Jupiter’s government expenditure.arrow_forwardAn economy is described by the following equations: Supply: Y=F(K,L)=6K^0.6L^0.4 K=405, L=110 Demand: C=231+0.8(Y-T) |=1161.0-129r G=150,T=120 NX=125-490e r=r*= 5 A. What Is the level of GDP in this economy? B. How much are household savings? C. How much Is the government saving? D. How much is National Saving? E. How much is investment spending? F. Net capital outflow is: G. Equilibrium exchange rate is : Suppose G drops to 142, Find: H. National Saving I. Investment J. New trade balance K. New Equilibrium exchange ratearrow_forwardPart of a bridge built by the government of Ritzland collapsed in the same year it was constructed. If the total cost of building the bridge was $4 million, and then it costs $3 million to repair it, which of the following will happen in this scenario, everything else remaining unchanged? Ritzland's GDP will decrease by $4 million. Ritzland's GDP will increase by $3 million. Ritzland's GDP will increase by $7 million. Ritzland's GDP will increase by $1 millionarrow_forward
- For the following question , please indicate whether current GDP of the United States will be affected and, if so, by how much .In each case, indicate also which component(s) of GDP will be affected and by how much In August 2020 Marie received unemployment benefits for $4,000 and, in May, she received her $1,400 Economic Impact Payment (i.e. coronavirus stimulus check) from the IRS (the tax authority in the US).arrow_forwardCalculate the four components of aggregate expenditure and GDP for the following economy using data from the table below.Instructions: Enter your responses as whole numbers. If you are entering any negative numbers, be sure to include a negative (-) sign in front of those numbers. GDP Consumption expenditures $600 Exports $75 Government purchases of goods and services $200 Construction of new homes and apartments $100 Sales of existing homes and apartments $200 Imports $100 Beginning-of-year inventory stocks $100 End-of-year inventory stocks $150 Business fixed investment $100 Government payments to retirees $100 Household purchases of durable goods $150 Consumption expenditures: $ Investment expenditures: $ Government Purchases: $ Net Exports: $ GDP: $arrow_forwardFrom 2009 to 2019, suppose that GDP increased by 25 percent. Real GDP increased by 15%. The overall level of prices increased by about 10% 20% 15% 5%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning