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Suppose that in 1984 the total output in a single-good economy was 7,000 buckets of chicken. Also suppose that in 1984 each bucket of chicken was priced at $ 10. Finally, assume that in 2005 the price per bucket of chicken was $ 16 and that 22,000 buckets were produced. Instructions: In part a enter your answer as an index number rounded to 1 decimal place. In parts b-c, enter your answer as whole numbers. What is the GDP price index for 1984, using 2005 as the base year? By what percentage did the price level, as measured by this index, rise between 1984 and 2005? What were the amounts of real GDP in 1984 and 2005?

Question

Suppose that in 1984 the total output in a single-good economy was 7,000 buckets of chicken. Also suppose that in 1984 each bucket of chicken was priced at $ 10. Finally, assume that in 2005 the price per bucket of chicken was $ 16 and that 22,000 buckets were produced. Instructions: In part enter your answer as an index number rounded to 1 decimal place. In parts b-c, enter your answer as whole numbers. 

What is the GDP price index for 1984, using 2005 as the base year? 

By what percentage did the price level, as measured by this index, rise between 1984 and 2005? 

What were the amounts of real GDP in 1984 and 2005? 

 

 

check_circleAnswer
Step 1

The following information is given:

Year
Price
Quantity
7,000
22,000
1984
$10
2005
$16
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Year Price Quantity 7,000 22,000 1984 $10 2005 $16

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Step 2

GDP Price Index can be calculated by the following formula:

 

Price of good in specific year x100.
Price index
Price of good in base year
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Price of good in specific year x100. Price index Price of good in base year

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Step 3

The GDP Price Index for the years 1984 and 2005 (ta...

10
x100 62.5
16
Price index for 1984 = -
16
x100 100
16
Price index for 2005 =
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10 x100 62.5 16 Price index for 1984 = - 16 x100 100 16 Price index for 2005 =

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