Essentials of Economics - Standalone book
10th Edition
ISBN: 9781259235702
Author: Bradley R Schiller, Karen Gebhardt
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 2P
To determine
(a)
Nominal GDP in year 1 and year 2.
To determine
(b)
To evaluate: percentage change in nominal GDP between year 1 and year 2.
To determine
(c)
To calculate: real GDP in year 2, taking year 1 as the base year.
To determine
(d)
To calculate: percentage change in real GDP between Year 1 and Year 2.
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Production
Prices
Year1 Year 2 Year 3
Year 1 Year 2 Year
Good X 50
50
60
$1.00 $1.20 $1.20
Good Y
100 120 140
$0.60 $0.60 $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. 92.4
O b. 105
O . 84.5
O d. 108.2
1.
dix
Suppose the country produces only two goods: beef and wheat. The table
below summarizes the quantities of each good produced and the
corresponding prices in every year since 2005:
Beef Wheat
Nomin
al
PQP Q GDP
2005 $4 12 $1. 22
0
6
0
11 $1.
23
4
0
15
$1.
24
5 9 5
2007
2006 $4.
5
$4.
6
LO
5
LO
Real
GDP
(in
2006
price
s)
GDP
Deflat
or
Inflation
Rate
(using
GDP
Deflator)
CP
I
Inflation
Rate
(using
CPI)
If nomiņal GDP is 10trillion and real GDP is 12trillion then the GDP deflator is:
120, indicating that the price level has increased by 20% since the base year.
83.33, indicating that the price level has increased by 83.33% since the base year.
O 120, indicating that the price level has decreased by 20% since the base year.
O 83.33, indicating that the price level has decreased by 16.67% since the base year.
Chapter 2 Solutions
Essentials of Economics - Standalone book
Knowledge Booster
Similar questions
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- Refer to the table. The value of real GDP in 2018 is Nominal Real Price Year GDP GDP Index 2018 $200,000 100 2019 $200,000 50 2020 $200,000 $400,000 O 2,000 O 4,000 100,000 O 200,000 O 400,000 QUESTION 3 Refer to the table. The value of real GDP in 2019 is Nominal Real Price Year GDP GDP Index 2018 $200,000 100 2019 $200,000 50 2020 $200,000 $400,000 O2,000 O 4,000 100,000 200,000 O 400,000arrow_forwardWhich of these statements is not true when we discuss GDP calculation? O a. GDP includes earnings of both the citizens and non-citizens but are residing inside the country. O b. Incomes made by a citizen outside of his country will be included in the calculation of GDP c Expenditures of citizens and non-citizens made inside the country is included in GDP calculation d. Incomes made by expatriates are included in the calculation of GDParrow_forwardNominal Year Price level GDP 1982 100 €1,600 1992 150 €3,000 2002 300 €6,000 In the above table, which of the following is true concerning changes between 1992 and 2002? O None of the above statements is true. O Nominal GDP increased, but real GDP decreased. O Nominal GDP increased, but real GDP was unchanged. O Nominal and real GDP both increased.arrow_forward
- Suppose the GDP deflator was 200 in 2008 and 190 in 2009. In addition, nominal GDP was 1% lower in 2009 than in 2008. Given this information, the approximate. rate of real GDP growth in 2009 was: O 3% 4% O 5% 6%arrow_forwardNominal Real Year Ox Px $5 S6 Oy Py $1 $2 Oz GDP Pz $10 GDP 1 10 35 20 12 35 25 $15 $345 15 $7 $8 40 $2 $3 $5 30 $12 $12 $14 $545 20 50 35 30 $9 50 40 Assume that Q is the amount of goods X, Y, and Z produced in a given year, that P is the price of goods X. Y. and Z in a given year, and that Year 1 is the "base year," then the rate of inflation from Year 4 to Year 5 is A -12.36%. 11.17%. 23.29%. D) 34.00%. 49.86%.arrow_forwardProduction Prices Year1 Year 2 Year 3 Year 1 Year 2 Year Good X 50 50 60 $1.00 $1.20 $1.20 Good Y 100 120 140 $0.60 $0.60 $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. 92.4 O b. 84.5 Oc. 108.2 O d. 105arrow_forward
- Which of the following would NOT be included in this year's GDP? O 1. the production of a television show. O 2. the purchase of a new work truck. O 3. the hiring of a new police officer. O4. your purchase of your neighbor's 2001 Toyota.arrow_forwardWhich of the following statements is true about GDP as a measure of a country's economic healt? Select one: O a. It does not include the services produced in a country O b. It includes profits from companies' overseas operations O c. It does not include profits earned by foreign companies within the country being measured O d. It essentially takes into account the concept of GDP in relation to population O e. It measures only those goods and services made within a countryarrow_forwardTable 7-2 Year 1 Year 1 Year 2 Year 2 Goods Quantities Prices Quantities Prices A 90 $1.50 80 $1.40 80 $0.60 70 $0.70 C 70 $0.40 60 $0.50 Refer to Table 7-2. GDP in Year 1 is O $215.00 O $211.00 O $186.00 O $191.00arrow_forward
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