Assume the following economy produces only hat and that the base year is year 2. Use the table below to answer the following questions. 1. What is the price index for years 1, 3, and 4? (Calculate) 2. What is the nominal GDP and the real GDP for years 1 and 3? (Calculate) 3. Explain why GDP is not a good measure for individual well-being? (Use at least 3 reasons).
Assume the following economy produces only hat and that the base year is year 2. Use the table below to answer the following questions. 1. What is the price index for years 1, 3, and 4? (Calculate) 2. What is the nominal GDP and the real GDP for years 1 and 3? (Calculate) 3. Explain why GDP is not a good measure for individual well-being? (Use at least 3 reasons).
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 7QR
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Assume the following economy produces only hat and that the base year is year 2. Use the table below to answer the following questions.
1. What is the price index for years 1, 3, and 4? (Calculate)
2. What is the nominal
3. Explain why GDP is not a good measure for individual well-being? (Use at least 3 reasons).
Transcribed Image Text:Assume the following economy produces only hat and that the base year is year 2. Use the table
below to answer the following questions.
1. What is the price index for years 1, 3, and 4? (Calculate)
2. What is the nominal GDP and the real GDP for years 1 and 3? (Calculate)
3. Explain why GDP is not a good measure for individual well-being? (Use at least 3 reasons).
(4) Unadjusted
(1) Total Hats
(units of output) Hats
(2) Price of
(5) Adjusted
(3) Price
index
Year
or nominal
GDP
or real GDP
1
1100
$18
1000
$20
100
$20,000
$20,000
1200
$22
4
1300
$24
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