2. Prime Minister Derpington wants to know about the difference between different macro variables like nominal GDP, real GDP, and how inflation links the two together. She hasn't quite figured out what the difference is yet, and she really needs your help. The following table shows the quantity (in millions) of each good sold as well as the price (in the Derpistani currency, the "Bone" B). Table 1: Derpistan's Economy 2016 2018 2016 2017 2017 2018 Price Quantity Good Price Quantity Price Quantity Friskies Cat Food 12 15 14 17 15 15 50 Cat Litter 3 51 7 52 Mango Salsa Mr. Bill Stuffed Toys Squirt Bottles 80 80 80 10 12 13 15 12 18 19 19 15 10 Canned Tuna 11 10 Insulin 10 66 12 66 13 56 Catnip 12 29 (c) Prime Minister Derpington is worried that inflation might be a problem in Chirpistan. Using the GDP deflator, what was inflation in 2017? (d) Suppose that Chirpistan's Kongress votes to ban catnip because of its intoxicating effects on some of the Chirpistani citizens. How much different is GDP in 2018 when catnip is illegal?

2. Prime Minister Derpington wants to know about the difference between different macro variables like nominal GDP, real GDP, and how inflation links the two together. She hasn't quite figured out what the difference is yet, and she really needs your help. The following table shows the quantity (in millions) of each good sold as well as the price (in the Derpistani currency, the "Bone" B). Table 1: Derpistan's Economy 2016 2018 2016 2017 2017 2018 Price Quantity Good Price Quantity Price Quantity Friskies Cat Food 12 15 14 17 15 15 50 Cat Litter 3 51 7 52 Mango Salsa Mr. Bill Stuffed Toys Squirt Bottles 80 80 80 10 12 13 15 12 18 19 19 15 10 Canned Tuna 11 10 Insulin 10 66 12 66 13 56 Catnip 12 29 (c) Prime Minister Derpington is worried that inflation might be a problem in Chirpistan. Using the GDP deflator, what was inflation in 2017? (d) Suppose that Chirpistan's Kongress votes to ban catnip because of its intoxicating effects on some of the Chirpistani citizens. How much different is GDP in 2018 when catnip is illegal?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 29P: The prime interest rate is the rate that banks charge their best customers. Based on the nominal...

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