Production Prices Year1 Year 2 Year 3 Year 1 Year 2 Year 3 Good X 60 80 100 $1.00 $1.00 $1.40 Good Y 100 110 130 $0.80 $0.90 $1.00 Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is Select one: O a. 100 O b. 93.9 O c. 106.5 O d. 179

Production Prices Year1 Year 2 Year 3 Year 1 Year 2 Year 3 Good X 60 80 100 $1.00 $1.00 $1.40 Good Y 100 110 130 $0.80 $0.90 $1.00 Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is Select one: O a. 100 O b. 93.9 O c. 106.5 O d. 179

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter15: Gross Domestic Product

Section: Chapter Questions

Problem 7SQP

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Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living. The environment becomes dirtier The crime rate declines A greater variety of goods become available to consumers Infant mortality declines
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using the table below giving the quantity and price of goods producedin an economy in two periods in suitable units, assuming that there are only three goodsproduced in the economy. Consider the economy described above a) What is nominal GDP in 2003 and in 2004? By what percentage does nominalGDP change from 2003 to 2004?b) Using the prices for 2003 as the set of common prices, what is real GDP in 2003and in 2004? By what percentage does real GDP change from 2003 to 2004?c) Using the prices for 2004 as the set of common prices, what is real GDP in 2003and in 2004? By what percentage does real GDP change from 2003 to 2004?d) Why are the two output growth rates constructed in (b) and (c) different? Whichone is correct? Explain your answer.
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Consider an economy that produces only chocolatebars. In year 1, the quantity produced is 3 barsand the price is $4 per bar. In year 2, the quantityproduced is 4 bars and the price is $5 per bar.In year 3, the quantity produced is 5 bars and theprice is $6 per bar. Year 1 is the base year.a. What is nominal GDP for each of these three years?b. What is real GDP for each of these years?c. What is the GDP deflator for each of these years?d. What is the percentage growth rate of real GDPfrom year 2 to year 3?e. What is the inflation rate as measured by the GDPdeflator from year 2 to year 3?f. In this one-good economy, how might you haveanswered parts (d) and (e) without first answeringparts (b) and (c)?
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