An economy produces only three types of goods: apples, oranges and bananas, production units and prices per unit for year 2000 and 2001 are as follows: Year 2000 Year 2001 QTY QTY PRICE APPLES 3000 2 4000 3 ORANGES 8000 4 12000 5 BANANAS 6000 3 14000 2 A. What is nominal GDP in 2000 and 2001? B. Using 2000 as the base year, what is the GDP deflator for 2000 and 2001? What is the rate of inflation over this period? C. Using 2001 as the base year, what is the GDP deflator for 2000 and 2001? What is the rate of inflation over this period? D. Explain why the choice of base year changes the rate of inflation PRICE

An economy produces only three types of goods: apples, oranges and bananas, production units and prices per unit for year 2000 and 2001 are as follows: Year 2000 Year 2001 QTY QTY PRICE APPLES 3000 2 4000 3 ORANGES 8000 4 12000 5 BANANAS 6000 3 14000 2 A. What is nominal GDP in 2000 and 2001? B. Using 2000 as the base year, what is the GDP deflator for 2000 and 2001? What is the rate of inflation over this period? C. Using 2001 as the base year, what is the GDP deflator for 2000 and 2001? What is the rate of inflation over this period? D. Explain why the choice of base year changes the rate of inflation PRICE

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Measuring A Nation's Income

Section: Chapter Questions

Problem 6PA

See similar textbooks

Similar questions

Nominal GDP in Nowhereland in 2018 and 2019 is as follows: Can you say that the production of goods and services in Nowhereland has increased between 2018 and 2019? Why or why not?
U.S. macroeconomic data are among the best in the world. Given what you learned in the Clear It Up 'How do statisticians measure GDP?', does this surprise you, or does this simply reflect the complexity of a modern economy?
Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
What are the two main difficulties that arise in comparing different comparing GDP?
Why is the GDP deflator not an accurate measure of inflation as it impacts a household?