1. What are the two major differences between the CPl and the GDP deflator index?(5 marks)2. Define private saving, public saving, national saving, and investment. How arethey related? (5 marks)3. Give an example of an event that would shift the aggregate-demand curve. Whichway would this event shift the curve? (5marks)4. a. What are the four expenditure components of Gross Domestic Product (GDP)?Explain each of these. (10 marks)B. Define real GDP and nominal GDP. Which is a better measure of economicwell-being? (10 marks)5 a) Explain briefly what the consumer price index measures and how it isconstructed. (10 marks)b) Describe the three problems that make the consumer price index an imperfectmeasure of the cost of living. (10 marks)

Answered: .. What are the two major differences…

Business

Economics

.. What are the two major differences between the CPI and the GDP deflator index? 5 marks)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 3PA

See similar textbooks

Related questions

Q: Calculate the GDP deflator and the rate of inflation for each year: (€ million) 2013 2014 2015…

A: The GDP deflator monitors price changes across all goods and services produced in a nation.The GDP…

Q: Consider the following table. Price Price Goods Production Import Export (2019) (2020) Good 49 17 18…

A: GDP is the gross domestic product which includes all the goods produced within the economic borders…

Q: 2. The table below shows GDP deflator and CPI for 2019 and 2020. Calculate the inflation rate from…

A: Inflation rate with GDP deflator = deflator in 2020 / 2019 – 1 * 100 = 1.29 % Inflation rate with…

Q: 4. If the CPI is 150 and nominal income is $100,000, what does real income equal?

A: Meaning of Consumer Price Index: The rate of inflation is measured on the basis of price indices…

Q: Casel: In the country of Shem, the CPI is calculated using a market basket consisting of 15 apples,…

A: Given that the market basket consist of 15 apple (A), 5 loaves (L), 3 robes (R), 20 gallons of…

Q: QUESTION 23 Production of a car in Ohio will have an impact in O a. the U.S. GDP deflator, but not…

A: In an economy, GDP deflator and CPI,both are used as the measures of inflation rate with having some…

Q: When CPI is calculated, chicken breasts are given greater weight than pork chops if a the price of…

A: CPI or consumer price index is a very important tool in economics which is used to calculate an…

Q: Distinguish between the Consumer Price Index (CPI) and the Producer Price Index (PPI)

A: A price index is an index through which the relative price changes of various goods and services can…

Q: Suppose that the prices of capital goods (goods purchased by firms as investment) rose. How would…

A: In an economy, capital goods at ethe goods that are produced and consumed for the long-run.

Q: 1. Below are some data from the land of milk and honey. Year Pmilk (RM) Qmilk (Litre) Phoney (RM)…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Does an increase in the price of imported Belgian chocolate affect the CPI or the GDP deflator more?…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 100 $2.00 180 2007 $5.00 120 $2.50 200 2008 $6.00 150 $3.50 200 (a) Compute the growth rate of real…

A: Real gross domestic product is a macroeconomic measure of the value of economic output adjusted for…

Q: The table shows the quantities in the CPI basket and the prices in 2018, 2019, and 2020. The…

A: Consumer price index measures the basket of goods as fixed in the base year.

Q: Explain the difference between GDP Deflator and Consumer Price Index. And explain problems in…

A: Macroeconomics studies the economy as a whole and focuses on the overall picture rather than…

Q: Briefly discuss the most important differences between the calculation of the CPI and the GDP…

A: The most important difference between Consumer Price Index (CPI) and the GDP deflator is that CPI…

Q: Over a long period of time the CPI rose from 100 to 150. What does a CPI of 150 mean? If the price…

A: A price index number is a macroeconomic measure that compares a series of prices in different time…

Q: In 2019 and in 2020, consumers in Dexter purchased only books and pons 2019 2020 The prices and…

A: Consumer Price Index is the weighted average price of a market basket of consumer goods and services…

Q: Explain the differences between the Consumer Price Index (CPI) and the GDP deflator

A: The consumer price index and GDP deflator are both used to measure inflation in the economy.…

Q: Can you give an example of the answer for the cpi. I am confused on what they are asking.

A: Suppose the 5 products are apple, guava, orange, melon and kiwi.

Q: 3. Shipments of product from manufacturer to the retailer are tracked by the U.S. Census Bureau. The…

A: We are going to use CPI and PPI calculations to answer this question.

Q: In 2014, Apple’s revenue was $183 billion, and it grew to $267 billion in 2018. a. What is the…

A: Real growth rate is the growth rate adjusted for inflation. CPI is used to measure inflation rate.

Q: The table below lists hypothetical CPI and wage values for the United States from different decades.…

A: Real wage is the wage adjusted for inflation. CPI accounts for changes in cost of market basket of…

Q: 10) The GDP deflator is designed to adjust nominal GDP for changes in the unemployment rate. b. а.…

A: Answer 10) The GDP deflator is designed to adjust nominal GDP for change in the price. The GDP…

Q: Define CPI. What is it? What does it measure? How is it calculated?

A: CPI is the abbreviation for consumer price index.

Q: Distinguish between the Consumer Price Index (CPI) and the Producer Price Index (PPI)

A: Spending on domestic and internationally imported consumer services for urban and metropolitan…

Q: explain four main differences between the GDP Deflator and CPI, with one example for each…

A: Differences between GDP deflator and CPI 1.Gross domestic product(GDP) deflator measures the…

Q: One reason the CPI is monitored very closely by government, businesses, and workers is that Multiple…

A: Workers, firms, and the government are all part of the economy. The working of each sector depends…

Q: Define the term consumer price index (CPI)?

A: A price index number is a macroeconomic measure that compares a series of prices in different time…

Q: The BBS reported the following CPI data: June 2016- 201.9 June 2017- 207.2 June 2018- 217.4 d) How…

A: CPI is consumer price index. It measures changes in the prices of certain goods and services. It…

Q: 1. Explain the Consumer Price Index (CPI)? 2. Consider an economy that produces and consumes shoes…

A: Since you have asked multiple questions, we will solve the first three questions for you. If you…

Q: How is CPI calculated ?? Illustrate with example

A: The Consumer Price Index shows the changes in the price level in the market basket of goods…

Q: For the next question assume that consumers in an economy only purchase two products, tablets and…

A: Inflation is defined as the general increase in the price level in the economy. The increase in the…

Q: The GDP deflator for this year is calculated by dividing the using by the using and multiplying by…

Q: Does an increase in the price of imported Belgian chocolate affect the CPI or the GDP deflator more?…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Which do you think has a greater effect on the CPI:a 10 percent increase in the price of chicken or…

A: The Consumer price index (CPI) is a metric examining the weighted average of consumer products and…

Q: 4. In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods…

A: CPI measures the cost of market basket of goods and services which is bought by a consumer in a…

Q: Explain what is the difference between CPI and GDP deflator?

A: 2. Both CPI and GDP deflator is use to measure the inflation rate. Following are the difference…

Q: The goods included in the CPI change as spending habits change. Select one: O True False

A: Consumer Price Index is the measure of change in average price of the goods and services purchased…

Q: In 1923, suppose a new shirt cost $4.7 and the CPI was 100. In 1973, the CPI was 210. In 1973, how…

A: The new shirt cost can be calculated as follows:

Q: For the next question assume that consumers in an economy only purchase two products, tablets and…

Q: Table 1 Quantity Price Quantity Price Item 1990 1990 1991 1991 Coffee 10 ‒‒‒‒ 8 $50 Sugar 20 $1 15…

A: Merely in simple words we can say that the Consumers price index basically or actually measures the…

Q: The monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows…

A: Consumer price index can be defined as an instrument to measure inflation.changes in measured CPI…

Q: Pete is a student who spends 10 percent of his expenditure on books and supplies, 30 percent on…

A: A consumer price index is used for estimating the changes in the prices in the basket of goods and…

Q: What is the Higher Education Price Index (HEPI), where does it fit in with the CPI and PPI, and how…

A: Higher Education price Index represents the price and its adjustments in the charges of the…

Q: Assuming that a household in Hadililand consumes only apple juice and T-shirts. Last year, which was…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Distinguish between the Consumer Price Index (CPI) and the Producer Price Index (PPI)

A: the Consumer Price Index (CPI) and the Producer PriceIndex (PPI)

Question

1. What are the two major differences between the CPl and the GDP deflator index?
(5 marks)
2. Define private saving, public saving, national saving, and investment. How are
they related? (5 marks)
3. Give an example of an event that would shift the aggregate-demand curve. Which
way would this event shift the curve? (5marks)
4. a. What are the four expenditure components of Gross Domestic Product (GDP)?
Explain each of these. (10 marks)
B. Define real GDP and nominal GDP. Which is a better measure of economic
well-being? (10 marks)
5 a) Explain briefly what the consumer price index measures and how it is
constructed. (10 marks)
b) Describe the three problems that make the consumer price index an imperfect
measure of the cost of living. (10 marks)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If I buy Apple common stock, AAPL in a primary offering, brand new stock that has never been issued, that is, I buy it directly from Apple, not on an exchange, with the assurance from Apple, that the proceeds from this sale will be used exclusively in the production of new iphones, would my investment count in the Investment portion of GDP? Assume that the transaction, and the production of the iphones, all occur in the same year. Also assume that Apple is 100% using the proceeds in iphone production. Also, assume that the money from this stock sale is the onlymoney Apple will be using in its production of these iphones. Under these circumstances, would my investment (and others who bought the offering) count in the Investment portion of GDP? Why or why not?
DATASET 1 Table 1 gives data for real consumption expenditure, real income, real wealth, and real interest rates for country X for the years 1947-2000. TABLE 1: REAL CONSUMPTION EXPENDITURE, REAL INCOME, REAL WEALTH, AND REAL INTEREST RATES FOR COUNTRY X, 1947-2000 Year Consumption Expenditure (C) Income (Yd) Wealth (W) Interest Rate (R) 1947 976.4 1035.2 5166.8 -10.351 1948 998.1 1090.0 5280.8 -4.720 1949 1025.3 1095.6 5607.4 1.044 1950 1090.9 1192.7 5759.5 0.407 1951 1107.1 1227.0 6086.1 -5.283 1952 1142.4 1266.8 6243.9 -0.277 1953 1197.2 1327.5 6355.6 0.561 1954 1221.9 1344.0 6797.0 -0.138 1955 1310.4 1433.8 7172.2 0.262 1956 1348.8 1502.3 7375.2 -0.736 1957 1381.8 1539.5 7315.3 -0.261 1958 1393.0 1553.7 7870.0 -0.575 1959 1470.7 1623.8 8188.1 2.296 1960 1510.8 1664.8 8351.8 1.511…
DATASET 1 Table 1 gives data for real consumption expenditure, real income, real wealth, and real interest rates for country X for the years 1947-2000. TABLE 1: REAL CONSUMPTION EXPENDITURE, REAL INCOME, REAL WEALTH, AND REAL INTEREST RATES FOR COUNTRY X, 1947-2000 Year Consumption Expenditure (C) Income (Yd) Wealth (W) Interest Rate (R) 1947 976.4 1035.2 5166.8 -10.351 1948 998.1 1090.0 5280.8 -4.720 1949 1025.3 1095.6 5607.4 1.044 1950 1090.9 1192.7 5759.5 0.407 1951 1107.1 1227.0 6086.1 -5.283 1952 1142.4 1266.8 6243.9 -0.277 1953 1197.2 1327.5 6355.6 0.561 1954 1221.9 1344.0 6797.0 -0.138 1955 1310.4 1433.8 7172.2 0.262 1956 1348.8 1502.3 7375.2 -0.736 1957 1381.8 1539.5 7315.3 -0.261 1958 1393.0 1553.7 7870.0 -0.575 1959 1470.7 1623.8 8188.1 2.296 1960 1510.8 1664.8 8351.8 1.511…
Gross Domestic Product Explain how net exports affect the US economy. Describe both positive and negative impacts on GDP. Why do national income accountants use net exports to compute GDP, rather than simply adding exports to the other expenditure components of GDP? You have the following information on 3 countries: Soccerland, Handeggland, and Neverland How long will it take until Soccerland’s GDP increases by 75%? How long will it take until Soccerland and Handeggland have the same GDP? Soccerland’s population is not happy that, eventually, Handeggland is going to have higher GDP than their country. They feel that they are a much better country, so they are going to work harder to ensure that Handeggland will never catch up with Soccerland. If Soccerland’s new growth rate is constant every year, what is the minimum growth rate that ensures that Soccerland will always have a higher GDP than Handeggland? Neverland’s ambition is to host the World Cup. At the…