(a)
| Year 1 | Year 2 | |||
| Quantity | Quantity | Price | ||
| Oranges | 100 | $5 | 150 | $5 |
| Pears | 100 | $3 | 75 | $4 |
The growth rate of constant-dollar real
Answer to Problem 3E
The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.
Explanation of Solution
| Year 1 | Year 2 | Year 1 | Year 2 | |||
| Quantity | Price | Quantity | Price | Value of goods with Year 1 as base | Value of goods with Year 1 as base | |
| Oranges | 100 | $5 | 150 | $5 | $500 | $750 |
| Pears | 100 | $3 | 75 | $4 | $300 | $225 |
| Total | $800 | $775 | ||||
The growth rate of GDP from Year 1to Year 2 is given by:
Growth Rate of GDP =
Growth Rate of GDP =
Growth Rate of GDP =
Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.
(b)
| Year 1 | Year 2 | |||
| Quantity | Price | Quantity | Price | |
| Oranges | 100 | $5 | 150 | $5 |
| Pears | 100 | $3 | 75 | $4 |
The growth rate of constant-dollar real GDP with Year 2 as base.
Answer to Problem 3E
The growth rate of constant dollar GDP with year 2 as base price is 16.67%.
Explanation of Solution
| Year 1 | Year 2 | Year 1 | Year 2 | |||
| Quantity | Price | Quantity | Price | Value of goods with Year 2 as base | Value of goods with Year 2 as base | |
| Oranges | 100 | $5 | 150 | $5 | $500 | $750 |
| Pears | 100 | $3 | 75 | $4 | $400 | $300 |
| Total | $900 | $1050 | ||||
The growth rate of GDP from Year 1to Year 2 is given by
Growth Rate of GDP =
Growth Rate of GDP =
Growth Rate of GDP =
Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.
Want to see more full solutions like this?
Chapter 5 Solutions
Macroeconomics (MindTap Course List)
- B G C D E H M K Armchair For puzzles 96 and 97, use the first phylogenetic tree on the following page (Figure 2). 96) Who is the most recent common ancestor of species A and species G? 97) Who is the most recent common ancestor of species D, E, and F?arrow_forwardNot use ai pleasearrow_forwardNot use ai pleasearrow_forward
- Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank's assets? I believe my calculation of 1.3 billion may be incorrect May I have my work checked pleasearrow_forwardThe following graph shows the downward-sloping demand curve for Oiram-46, a monopolist producing unique magic hats. The graph also shows Oiram-46's marginal revenue curve and its average total cost curve. On the following graph, use the orange point (square symbol) to indicate the profit-maximizing quantity. Use the blue point (circle symbol) to indicate the profit-maximizing price. Use the purple point (diamond symbol) to indicate the average total cost. Use the tan rectangle (dash symbol) to show Oiram-46's total revenue and the grey rectangle (star symbol) to show its total cost. PRICE (Dollars per magic hat) 2 0 20 Marginal Cost 18 ATC 16 Profit-Maximizing Quantity 14 12 Profit-Maximizing Price MC 8 Demand 02 4 6 8 10 12 14 16 18 20 QUANTITY (Magic hats per week) Based on the graph, Oiram-46's profit is equal to 5 TOTAL SCORE: 1/4 Average Total Cost Total Revenue Total Cost Grade Step 2 (to complete this step and unlock the next step)arrow_forwardExplain information regarding the effective interest rates being charged and how much higher the rent-to-own stores’ cash price exceeded the price of the identical item at a reputable retail outlet.arrow_forward
- How can Rent-to-own industries avoid the restrictions on interest rates? Explain.arrow_forwardExplain why rent-to-own operations are so attractive to so many people compared to saving the money to buy the desired item or going to a thrift store to acquire the item?arrow_forwardExplain the business practices of the rent-to-own industry.arrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc