Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 1RQ
To determine
Nominal GDP and Real GDP.
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Please answer fast please help arjent
Suppose that Indonesia's national production function is Y = K 05L 05, where K is the
amount of land and Lis the amount of labor. The economy starts when the amount of
land owned is 100 units and the number of workers is 100 units. Calculate the following
indicators.
a. How much output is produced?
b. What are the labor wages and land rent?
c. What is the share of the output received by labor?
d. If a natural disaster occurs that causes the population to be reduced by half, what is
the new level of national output?
e. What are the new rates of labor wages and land rent?
f. What share of output does the labor receive now?
a. If nominal GDP rose, does that mean that production had to increase as well? Why or why not?An increase in nominal GDP
means there must have been an increase in inputs.
may have been due to an increase in the price level.
means production must have increased.
means production must have decreased.b. What about if real GDP increased?An increase in real GDP
may have been due to an increase in the price level.
means production must have increased because the price level is not held constant.
means production must have decreased.
means production must have increased because the price level is held constant.c. Why is it important to use real GDP when comparing changes over time?Changes in real GDP
over time will accurately reflect changes in real production.
should not be used. We should use changes in nominal GDP when analyzing changes over time.
have a time lag, which helps us accurately predict business cycles.
will include changes in the price level, which gives a complete picture.
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- Applied Problems on Monetary Policy and Interest Rates 1. For each of the following questions, draw the Money Demand curve (MD) and Money Supply curve (MS) and label the equilibrium interest rate as i*. Also show how the MS- MD graph changes due to the given events and as a result how the equilibrium interest rate changes. (In your answer you should clearly state and show what happens to the MS and MD curves and also what happens to the interest rate).arrow_forwardIf a consumer purchases a foreign-produced hair dryer at a department store, the value of the hair dryer is: a. included in both consumer purchases and exports. b. added to capital investment in equipment but then subtracted from consumer purchases. c. included in consumer purchases but then subtracted as part of imports. d. added to imports but then subtracted as part of exports. Please explain your answerarrow_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_forward
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