Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 6, Problem 7SPA
To determine
Illustrate whether the quantity of labor (aggregate hours) will increase or decrease.
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Students have asked these similar questions
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Economist believe there is a strong correlation between productivity and the standard of
living? Discuss.
[HINT: In your answer be sure to explain what productivity and standard of living mean.
Make a list of things that determine labour productivity and explain how each of them have
an impact on the standard of living.]
Suppose an economy that produces and consumes apples, bread, and toy-cars. In the
following table are data for two different years.
2019 2020
Good Quantity Price Quantity Price
Apples 50 Rs.50 60 Rs.60
Bread 200 Rs. 20 180 Rs.25
Cars 25 Rs. 100 30 Rs.140
a. Using 2019 as the base year, compute the following statistics for 2019 and 2020 in the table
given below:
Statistics 2018 2019
GROSS DOMESTIC PRODUCT
Nominal GDP
Real GDP
GROWTH RATE
Growth Rate of Nominal GDP
Growth Rate of Real GDP
PRICE INDICES
GDP deflator
Inflation rate using GDP deflator -
CPI (a fixed-weight price index)
Inflation rate using CPI
b. How much did the cost of living rise between 2018 and 2019? Compare the answers given by
GDP deflator and CPI. Explain the difference.
c. Explain which price index (GDP deflator or CPI) should be used to adjust the salaries,
budget or spending to counterbalance the changes in the cost of living? Why?
Chapter 6 Solutions
Macroeconomics
Ch. 6.1 - Prob. 1RQCh. 6.1 - Prob. 2RQCh. 6.1 - Prob. 3RQCh. 6.2 - Prob. 1RQCh. 6.2 - Prob. 2RQCh. 6.2 - Prob. 3RQCh. 6.3 - Prob. 1RQCh. 6.3 - Prob. 2RQCh. 6.3 - Prob. 3RQCh. 6.3 - Prob. 4RQ
Ch. 6.3 - Prob. 5RQCh. 6.3 - Prob. 6RQCh. 6.4 - Prob. 1RQCh. 6.4 - Prob. 2RQCh. 6.4 - Prob. 3RQCh. 6.5 - Prob. 1RQCh. 6.5 - Prob. 2RQCh. 6.5 - Prob. 3RQCh. 6 - Prob. 1SPACh. 6 - Prob. 2SPACh. 6 - Prob. 3SPACh. 6 - Prob. 4SPACh. 6 - Prob. 5SPACh. 6 - Prob. 6SPACh. 6 - Prob. 7SPACh. 6 - Prob. 8SPACh. 6 - Prob. 9APACh. 6 - Prob. 10APACh. 6 - Prob. 11APACh. 6 - Prob. 12APACh. 6 - Prob. 13APACh. 6 - Prob. 14APACh. 6 - Prob. 15APACh. 6 - Prob. 16APACh. 6 - Prob. 17APACh. 6 - Prob. 18APACh. 6 - Prob. 19APACh. 6 - Prob. 20APACh. 6 - Prob. 21APACh. 6 - Prob. 22APACh. 6 - Prob. 23APACh. 6 - Prob. 24APACh. 6 - Prob. 25APA
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Similar questions
- Tools Homework (Ch 25) Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Year 2016 2017 Physical Capital Labor Force (Printing presses) 300 480 Based on your calculations, productivity from 2016 to 2017. (Workers) 100 120 Physical Capital per Worker Labor Hours (Printing presses) (Hours) 4,000 4,200 Output (Books) 36,000 50,400 Labor Productivity (Books per hour of labor) in physical capital per worker from 2016 to 2017 is associated with Suppose you're in charge of establishing economic policy for this small island country. Which of the following policies would lead to greater productivity in the printing industry? Check all that apply. Subsidizing research and development into new printing technologies Imposing a tax on printing presses Encouraging…arrow_forwardPhysical Capital Year (Tools per worker) 2026 2051 15 20 Hermes Labor Force (Workers) Output Productivity (Crates of copia) (Crates per worker) 70 5,600 70 6,720 Vanaheim Physical Capital Year (Tools per worker) 2026 12 2051 17 Labor Force (Workers) 70 70 Output Productivity (Crates of copia) (Crates per worker) 3,500 5,740 Initially, the number of tools per worker was higher in Hermes than in Vanaheim. From 2026 to 2051, capital per worker rises by 5 units in each country. The 5-unit change in capital per worker causes productivity in Hermes to rise by a amount than productivity in Vanaheim. This illustrates the effect.arrow_forwardCompare the nominal GDP growth rates and the real GDP growth rates for 2015, 2016, and 2017. What do you conclude? Which of the two accurately measures the GDP and why?arrow_forward
- France produces two goods: milk and wheat. Below is a table showing prices and quantities of output for three years: Year Price of milk Quantity of milk Price of wheat Quantity of wheat 2019 €1 200 €2.9 300 2020 €1.2 250 €3 330 2021 €1.4 280 €3.2 375 The nominal GDP for 2021 is Assuming 2019 to be the base year, the real GDP for 2021 is GD deflator for 2021 is a) France's Office of National Statistics decides to determine the following representative bundle of goods and services purchased by a typical consumer: 5 milk products and 4 wheat products. The CPI in 2021 (assume 2019 to be the base year) is The yearly inflation rate for 2021 isarrow_forward19. Table below shows nominal GDP, the GDP deflator and the population for the U.S. for 2019 and 2020. Year Nominal GDP GDP deflators Population ( in $ billions) |2019| 1987 = 100 (in millions) 4567 51.2 240 2020 6532 116.8 280 Using the information contained in the above table, calculate: (a) Growth rate of Nominal GDP (b) Growth rate of population (c) Growth rate of real GDP (d) Growth rate of real GDP per capitaarrow_forwardAssume an economy with two firms. Firm A produces wheat and firm B produces bread. In a given year, firm A produces 4000 tonnes of wheat, sells 1000 tonnes of wheat to firm B at $20 per tonne, exports 2500 tonnes of wheat at $20 per tonne, and stores 500 tonnes as inventory. Firm A pays $50,000 in wages to consumers. Firm B produces 50,000 loaves of bread and sells all of it to domestic consumers at $3 per loaf. Firm B pays consumers $10,000 in wages. In addition to the 50,000 loaves of bread consumers buy from firm B, consumers import and consume 20,000 loaves of bread, and they pay $2 per loaf for this imported bread. Calculate gross domestic product using a. the product approach b. the expenditure approach c. the income approacharrow_forward
- . The real GDP in the first quarter of 2020 was found to be $500,000 and the number of hours worked was 5,000. In the first quarter of 2021, the real GDP increased to $720,000 while the number of hours worked increased to 6,000. Given these values, solve for labor productivity in both quarters and solve for the growth rate of labor productivity between the two quarters.arrow_forward# 3 E production function in 2018. Real wage rate (dollars per hour) 80 70 60 80 F3 $ 4 R F LL 50 40 30 20 Q Labor hours supplied 45 40 F4 % 5 35 30 25 20 15 5. What are the equilibrium real wage rate, the quantity of labor employed in 2018, labor productivity, and potential GDP in 2018? T G Labor hours. demanded 5 6. In 2019, the population increases and labor hours supplied increase by 10 at each real wage rate. What are the equilibrium real wage rate, labor productivity, and potential GDP in 2019? 0 F5 7. In 2019, the population increases and labor hours supplied increase by 10 at each real wage rate. Does the standard of living in this economy increase in 2019? Explain why or why not. 6 10 c 15 20 F6 25 30 35 Y & 7 ← Labor (hours) F7 5 10 15 20 25 30 35 40 U 8 Page Real GDP (2009 dollars) DII F8 425 800 1,125 1,400 1,625 1,800 1,925 2,000 ( F9 2 F10 > of 3 0 P F11arrow_forwardWhat are THREE public policies that can facilitate economic growth in a Caribbean economy. Suppose production and prices of food and clothing (the only two goods produced in this economy) in 2006 and 2007 are as follows: (base year = 2006) Year Quantity of Food Price of Food Quantity of Clothing Price of Clothing 2006 20 $15 15 $5 2007 60 $18 30 $6 Calculate the nominal and real GDP in 2006 and 2007, the GDP deflator and the growth rate in real output.arrow_forward
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