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Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator Ob. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in the CPI

Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator Ob. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in the CPI

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter24: Measuring The Cost Of Living
Section: Chapter Questions
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Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator O b. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in the CPI A consumer is endowed with some capital, which they can use to produce output according to the production function y = k". They can divide that output between consumption now or save it as capital for next period. They have a utility function given by U(cj,c2) = In(c) + 99 In(c2). For which of the following values of a will the consumer want to save the largest percent of their output? O a. 2 Ob. .5 OC. Their saving rate does not depend on a d. 8 In a Solow model with no population growth and no technology growth, an increase in the saving rate will cause O a. An increase in steady state consumption O b. A decrease in steady state consumption O c. We cannot answer the question without more information o d. No change in steady state consumption
Transcribed Image Text:Assume that in most years consumers consume roughly doble amounts of popcorn than potato chips. One year, the price of popcorn increased by 20% while the price of potato chips stayed constant. As a result, many consumers purchased more potato chips and fewer popcorn than usual. This price change would most likely cause O a. No change to either the CPI or GDP deflator O b. A larger change in the CPI than in the GDP deflator Oc. An equal change in the CPI and GDP deflator O d. A larger change in the GDP deflator than in the CPI A consumer is endowed with some capital, which they can use to produce output according to the production function y = k". They can divide that output between consumption now or save it as capital for next period. They have a utility function given by U(cj,c2) = In(c) + 99 In(c2). For which of the following values of a will the consumer want to save the largest percent of their output? O a. 2 Ob. .5 OC. Their saving rate does not depend on a d. 8 In a Solow model with no population growth and no technology growth, an increase in the saving rate will cause O a. An increase in steady state consumption O b. A decrease in steady state consumption O c. We cannot answer the question without more information o d. No change in steady state consumption
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