Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134739090
Author: Hubbard
Publisher: PEARSON
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Question
Chapter 19, Problem 19.3.6PA
To determine
Nominal GDP and Real GDP.
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Why is the Consumer Price Index likely more relevant to your own personal economic situation as compared to the other measures of inflation? Briefly describe how the CPI differs from the Producer Price Index and the GDP deflator.
Chapter 19 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 19 - Prob. 19.1.1RQCh. 19 - Prob. 19.1.3RQCh. 19 - Prob. 19.1.4RQCh. 19 - Prob. 19.1.5RQCh. 19 - Prob. 19.1.6PACh. 19 - Prob. 19.1.7PACh. 19 - Prob. 19.1.8PACh. 19 - Prob. 19.1.9PACh. 19 - Prob. 19.1.10PACh. 19 - Prob. 19.1.11PA
Ch. 19 - Prob. 19.1.14PACh. 19 - Prob. 19.2.1RQCh. 19 - Prob. 19.2.2RQCh. 19 - Prob. 19.2.3RQCh. 19 - Prob. 19.2.4PACh. 19 - Prob. 19.2.9PACh. 19 - Prob. 19.2.10PACh. 19 - Prob. 19.3.1RQCh. 19 - Prob. 19.3.2RQCh. 19 - Prob. 19.3.3RQCh. 19 - Prob. 19.3.4PACh. 19 - Prob. 19.3.5PACh. 19 - Prob. 19.3.6PACh. 19 - Prob. 19.3.7PACh. 19 - Prob. 19.3.8PACh. 19 - Prob. 19.3.9PACh. 19 - Prob. 19.3.10PACh. 19 - Prob. 19.4.1RQCh. 19 - Prob. 19.4.3RQCh. 19 - Prob. 19.4.4PACh. 19 - Prob. 19.4.6PACh. 19 - Prob. 19.4.7PACh. 19 - Prob. 19.4.8PACh. 19 - Prob. 19.1RDECh. 19 - Prob. 19.2RDECh. 19 - Prob. 19.6RDECh. 19 - Prob. 19.7RDE
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- Why might even real GDP be a misleading index of changes in output between 1950 and 2015 in the United States?arrow_forwardThe following table shows the outputs and prices of three products produced by an economy in 2018, 2019 and 2020. (i) Measure the nominal GDP, the real GDP and the GDP deflator in 2019 and 2020, taking 2018 as the base year.(ii) Using the GDP deflator, measure the inflation rate in the economy between 2018 and 2019, and also between 2019 and 2020. (iii) Assume all household consumption items are locally produced as shown in the table in Question (a). A typical household in the economy consumes 5 units of rice, 4 units of shirt and 2 units of shoes in 2018. Using 2018 as the base year, measure the CPI for 2019 and 2020 and the inflation rate between 2018 and 2019, and also between 2019 and 2020. Explain why the inflation rate is different from those computed from (a)(ii).arrow_forwardConsider a simple economy that produces two goods: pens and erasers. The following table shows the prices and quantities of the goods over a three-year period. Year Pens Erasers Price Quantity Price Quantity (Dollars per pen) (Number of pens) (Dollars per eraser) (Number of erasers) 2015 1 115 1 165 2016 2 135 4 225 2017 4 100 4 175 From 2016 to 2017, nominal GDP , and real GDP . The inflation rate in 2017 was . Why is real GDP a more accurate measure of an economy's production than nominal GDP? Real GDP does not include the value of intermediate goods and services, but nominal GDP does. Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is.arrow_forward
- Suppose the following table records the total output and prices of rice and gasoline for an entire economy. This economy produces rice and gasoline only. Further suppose the base year is 2015. Rice Gasoline Year Price Quantity Price Quantity 2015 $8.00 500 $2.00 2000 2016 $9.00 600 $2.30 2000 2017 $10.00 600 $3.00 1800 (1) Compute nominal GDP for 2015, 2016, and 2017. (2) Compute real GDP for 2015, 2016, and 2017. (3) Compute GDP deflator for 2015, 2016, and 2017. (4) Calculate inflation rate from 2016 to 2017 using GDP deflator you calculated above. Write your calculation below:arrow_forwardThe table describes an economy's labor market. What are the equilibrium quantity of labor employed and the equilibrium real wage rate? The equilibrium quantity of labor employed is enter your response here hours and the equilibrium real wage rate is $ enter your response here an hour.arrow_forwardWrite the difference between Nominal GDP and real GDP.arrow_forward
- Statistics In our discussion of the collection of macroeconomic statistics, we focused on the way in which the overall price level in the economy is measured, the way in which the unemployment of the population is measured, and the way in which the production of the economy is measured. We had also mentioned that these statistics had flaws and either overestimated or underestimated the reality of the situation. Briefly discuss the ways in which the measurement of the price level with the CPI, the unemployment rate, and the GDP are inaccurate.arrow_forwardExplain how a drop in GDP can influence the level of the interest rate (in 7 lines maximum). A captioned graphic illustration is requiredarrow_forwardThe following table shows the outputs and prices of three products A, B and C by a small economy in 2019, 2020 and 2021. 2019 2020 2021 Product price qty price qty price qty A $4 50 $5 55 $6 60 B $3 40 $5 42 $8 45 C $2 20 $3 25 $4 28 (A) Compute the nominal GDP, the real GDP and the GDP deflator in 2020 and 2021, taking 2019 as the base year. Using the GDP deflator, measure the inflation rate in the economy between 2019 and 2020, and also between 2020 and 2021. (B) A typical household consumes 3 units of A, 3 units of B and 2 units of C in 2019. Using 2019 as the base year, compute the CPI for 2020 and 2021 and the inflation rate between 2019 and 2020, and also between 2020 and 2021. Are the inflation rates computed from (b) the same as those computed from (a)? Why?arrow_forward
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