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- Why is the GDP deflator not an accurate measure of inflation as it impacts a household?The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?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?
- To measure the inflation rate, we calculate the percentage change ini. the consumer price indexii. the GDP deflatoriii. real GDPiv. nominal GDP a.iii b. any of these c. i, ii, or iii b. i or iiThe basket of goods in the Consumer Price Index consists ofabout _________ products; that is, several hundred specific products in over__________ broad-item categories. a)800; 200 b)80,000; 400 c)200; 800 d)80,000; 200State whether the following statements are true or false, then explain.(a) Buying a Japanese-brand vehicle that was made in Texas would harm the U.S. GDP.(b) Ken is not a U.S. citizen but teaches at the University of Chicago. The salary of his servicecannot be counted towards the U.S. GDP.(c) A $20,000 car was produced and sold to a car dealer in 2019, but it was sold to final consumerin 2020 for $20,000 – then $20,000 is counted to the GDP of 2020.
- The difference between the formulae used in the computations of CPI and GDP deflatorisa) The CPI uses a Laspeyer Index, whereas the GDP deflator uses a Paasche indexb) The CPI uses a Paasche Index, whereas the GDP deflator uses a Laspeyer indexc) The CPI uses a geometric mean of price relatives, whereas the GDP deflator usesan arithmetic averaged) The CPI uses an arithmetic average of price relatives, whereas the GDP deflatoruses a geometric mean.Nominal gross domestic product for the United States was $7,661.6 billion in 1996 and$8,110.9 billion in 1997. The GDP deflator was 109.5 in 1996 and 111.6 in 1997. Given theabove data, complete the following questions:a. What was the 1997 real GDP expressed in 1996 prices?b. What were the 1996 and 1997 GDPs expressed in base-year prices?c. What was the percent change in the nominal GDP between 1996 and 1997?d. What was the percent change in real GDP between 1996 and 1997?e. What was inflation between 1996 and 1997?in table plzz
- The table below gives the price and consumption (usage/sales) for two products xand yfor four years. Using year 2000 as the base year calculate for each year, thea) Basic expenditure index b) Laspeyers price index, and c) Paasche price indexWhat counts as GDP (II)? By how much does GDP rise in each of the fol-lowing scenarios? Explain. (a) A computer company buys parts from a local distributor for $1 million,assembles the parts, and sells the resulting computers for $2 million.(b) A real estate agent sells a house for $200,000 that the previous ownershad bought 10 years earlier for $100,000. Te agent earns a commissionof $6,000.(c) During a recession, the government raises unemployment benefts by$100 million.(d) A new U.S. airline purchases and imports $50 million worth of airplanesfrom the European company Airbus.Calculate GNP at MP if:- GDP at MP = $5500 Net factor income from abroad = $2200
