Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 16, Problem 2PA
Subpart (a):
To determine
Measuring
Subpart (b):
To determine
Measuring CPI and inflation rate.
Subpart (c):
To determine
Measuring CPI and inflation rate.
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Suppose the following information was published by the Australian Bureau of Statistics in 2017:
Item
Amount (AUD billion)
Household consumption
5,029.81
Government consumption
20,340.92
Exports
1,386.39
Value of cocaine seized at Sydney Airport
20,500
Value of intermediate goods in tractor manufacturing
502,003
Gross private domestic investment
352.69
Imports
386.95
Components used in the manufacture of cars
40,000
Gifts
15,236
Government investment
88.19
Value of second-hand goods
500.00
Value of banned endangered species elephant tasks seized at Melbourne Airport
600.00
Use the information provided to calculate Australia’s GDP in 2017
Consumer price index, based on a problem from “Principles of Economics” byN. Gregory Mankiw
Question 3)
Wen is a typical consumer. Wen spent a total of $10 on 10 pomegranates, $36 on 3 shawarmas,and $35 on 7 cups of coffee in August. In September, Wen spent a total of $18 on 12 pomegranates, $24on 2 shawarmas, and $42 on 7 cups of coffee. In October, Wen spent a total of $22 on 11 pomegranates,$33 on 3 shawarmas, and $32 on 4 cups of coffee.
a) Calculate the price of one unit of each good in each month.b) Using August as base month, calculate the CPI for each month.c) Find the inflation rate for September and October.
Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,
a.
nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5.
b.
nominal GDP is $500, real GDP is $800, and the GDP deflator is 160.
c.
nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5.
d.
nominal GDP is $800, real GDP is $500, and the GDP deflator is 160.
Chapter 16 Solutions
Essentials of Economics (MindTap Course List)
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Similar questions
Last year, a small nation with abundant forests cut down 200 worth of trees. It then turned 100 worth of trees into 150 worth of lumber. It used 100 worth of that lumber to produce $250 worth of bookshelves. Assuming the country produces no other outputs, and there are no other inputs used in producing trees, lumber, and bookshelves, what is this nations GDP? In other words, what is the value of the final goods the nation produced including trees, lumber and bookshelves?
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If the price of imported extra virgin olive oil decreases, then
both the GDP deflator and the consumer price index will decrease.
neither the GDP deflator nor the consumer price index will decrease.
the GDP deflator will decrease, but the consumer price index will not decrease.
the consumer price index will decrease, but the GDP deflator will not decrease.
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Suppose that the prices of capital goods (goods purchased by firms as investment) rose. How would the GDP deflator change: Decrease, Increase or No change? How would the CPI change: Decrease, Increase, or No change? GDP deflator: CPI:
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Consider an economy that produces and consumes bread and cars.
Year 2010
Year 2017
Price of a car
$ 50,000
$ 60,000
Price of a loaf of bread
$ 10
$ 20
Number of cars produced
100
120
Number of loaves of bread produced
500,000
400,000
How much have prices risen between year 2010 and year 2017?
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The consumer price index (CPI)
A. measures the price of a fixed basket of goods and services.
B. measures the price of a basket of goods and services that constantly changes as the
composition of consumer spending changes.
C. measures the amount of money that it takes to produce a fixed level of utility.
D. is one of the many statistics in the National Income Accounts.
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Give one reason how will it would be treated in estimating national income
1)Expenditure on fertilisers by a farmer
2)Purchase of tractor by a farmer
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Suppose that in the nation state of Craiglandia there are 2 final goods produced in the economy – food and clothing. Suppose the economy produces 10 units of food and 5 units of clothing in 2000 (the base year), and 10 units of food and 10 units of clothing in 2015. Further suppose the price of food was $2.00 per unit in 2000, and $3.00 per unit in 2015; whereas the price of clothing was $2.00 in 2000 and $2.00 in year 2015.
What was the nominal GDP for Craiglandia in 2015?
What was the real GDP for Craiglandia in 2015?
The GDP deflator for Craiglandia, for 2015, is _______; and it follows that Craiglandia experienced _______between 2000 and 2015.
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In the city of Paradise, government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows:
20 pizzas at $10 each
Rent of apartment, $600 per month
Gasoline and car maintenance, $100
Phone service, $50
In the year following the base year, the survey taker determine that pizzas have risen to $11 each, apartment rent is $640, gasoline and maintenance has risen to $120, and phone service has dropped in price to $40.
a). Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.
b). The family's nominal income rose by 5% between the base year and the subsequent year. Is the family worse off or better off in terms of what its income is about to buy?
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1. DBS Farms is a producer and retailer of farm products. DBS main products are Mangoes, Pawpaw and Pineapples. The current price of the Mangoes per Kilogram is GHS 50, the Pawpaw/Kg is GHS 80 and the Pineapple is GHS 40. This year the DBS Farms sold 10,000 kgs of Mangoes, 20,000 kgs of Pawpaw and 1 million kgs of Pineapples. In an attempt to improve revenue, the managers of the firm have decided to increase all prices by 10%. Market research has suggested that the price elasticity of demand for each product is: Mangoes: - 1.5; Pawpaw: -2.5; Pineapples: - 0.6. You have been asked to evaluate the planned price increases.
Comment on the planned price changes.
Would a 10% price reduction have been better for some or all of the products?
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