EBK ECONOMICS
13th Edition
ISBN: 8220106799642
Author: PARKIN
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 23, Problem 5SPA
To determine
Estimate the 2019 equilibrium real wage rate, labor productivity, and potential GDP.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
John owns a small farm in central lowa. John has been using the same resources to
grow the same amount and quality of potatoes each year on the farm for 25 years. Is
John helping to drive growth in real GDP?
Because John is not adding additional value each year by doing something better
than he did the year before, he is contributing to GDP; but he is not driving
growth in real GDP.
John is using land as a factor of production and making something with it; thus,
he is driving growth in real GDP.
John is adding value by growing potatoes, so each year he contributes to driving
growth in real GDP.
Because John is not adding additional value each year by doing something better
than he did the year before, he both not contributing to GDP nor driving growth
in real GDP.
Suppose an economy that produces and consumes apples, bread, and toy-cars. In the
following table are data for two different years.
2019 2020
Good Quantity Price Quantity Price
Apples 50 Rs.50 60 Rs.60
Bread 200 Rs. 20 180 Rs.25
Cars 25 Rs. 100 30 Rs.140
a. Using 2019 as the base year, compute the following statistics for 2019 and 2020 in the table
given below:
Statistics 2018 2019
GROSS DOMESTIC PRODUCT
Nominal GDP
Real GDP
GROWTH RATE
Growth Rate of Nominal GDP
Growth Rate of Real GDP
PRICE INDICES
GDP deflator
Inflation rate using GDP deflator -
CPI (a fixed-weight price index)
Inflation rate using CPI
b. How much did the cost of living rise between 2018 and 2019? Compare the answers given by
GDP deflator and CPI. Explain the difference.
c. Explain which price index (GDP deflator or CPI) should be used to adjust the salaries,
budget or spending to counterbalance the changes in the cost of living? Why?
Suppose that solar energy panel and electric car are the only two goods produced in an economy. The following table gives the quantity of
each produced and their price in the years 2018 and 2019:
Price
Electric Car
Price
Quantity
Solar Energy
panel
12
Quantity
Solar Energy
Electric Car
Panel
2018
100
200
15
2019
200
10
300
20
Growth rate of the real GDP in 2019 (in 2019 prices) is 25 %.
True or false? You will not get any credits unless you provide an explanation
Chapter 23 Solutions
EBK ECONOMICS
Ch. 23.1 - Prob. 1RQCh. 23.1 - Prob. 2RQCh. 23.1 - Prob. 3RQCh. 23.2 - Prob. 1RQCh. 23.2 - Prob. 2RQCh. 23.2 - Prob. 3RQCh. 23.3 - Prob. 1RQCh. 23.3 - Prob. 2RQCh. 23.3 - Prob. 3RQCh. 23.3 - Prob. 4RQ
Ch. 23.3 - Prob. 5RQCh. 23.3 - Prob. 6RQCh. 23.4 - Prob. 1RQCh. 23.4 - Prob. 2RQCh. 23.4 - Prob. 3RQCh. 23.5 - Prob. 1RQCh. 23.5 - Prob. 2RQCh. 23.5 - Prob. 3RQCh. 23 - Prob. 1SPACh. 23 - Prob. 2SPACh. 23 - Prob. 3SPACh. 23 - Prob. 4SPACh. 23 - Prob. 5SPACh. 23 - Prob. 6SPACh. 23 - Prob. 7SPACh. 23 - Prob. 8SPACh. 23 - Prob. 9APACh. 23 - Prob. 10APACh. 23 - Prob. 11APACh. 23 - Prob. 12APACh. 23 - Prob. 13APACh. 23 - Prob. 14APACh. 23 - Prob. 15APACh. 23 - Prob. 16APACh. 23 - Prob. 17APACh. 23 - Prob. 18APACh. 23 - Prob. 19APACh. 23 - Prob. 20APACh. 23 - Prob. 21APACh. 23 - Prob. 22APACh. 23 - Prob. 23APACh. 23 - Prob. 24APACh. 23 - Prob. 25APA
Knowledge Booster
Similar questions
- Gorgonzola is a small island nation with a simple economy that produces only six goods: sugar cane, yo-yos, rum, peanuts, harmonicas, and peanut butter. Assume that half of all sugar cane is used to produce rum, and one-fifth of all the peanuts are used to produce peanut butter. Use the production and price information in the table to calculate real GDP for 2013, 2014, and 2015 using 2014 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from 2014 to 2015?arrow_forwardWhat is the value of real GDP in 2019 if the GDP deflator is equal to 1.1 and nominal GDP is $21.5 trillion?arrow_forwardQ3: A new tractor is purchased and used on a farm to produce carrots which are sold in the grocery store. Is the new tractor an intermediate good or a final good? Explain your answer. Q4: Describe the difference between real GDP, nominal GDP. And real GDP per capita. Which is a better measure of the standard of living? Explain your answer. Q5: Describe what economic growth is. Explain why it is importantarrow_forward
- Economists often are interested in percentage change from one period to the next. The percentage rate of change of gross domestic product (GDP) is an important macroeconomic variable. If in 2010 GDP was $11,150 billion dollars, and GDP increased to $11,766 billion in 2011, what is the growth rate of the U.S. economy in 2011? %. (Enter your response rounded to one decimal place.)arrow_forwardc) The production and prices of T-Shirts and Jeans in Fashion Land in 2020 and 2021 are as follows: Quantity of T- Quantity of Price of T- Price of Shirts Jeans Shirts Jeans (thousands) (thousands) 2020 10 $25 10 $60 2021 15 $30 12 $70 Taking 2020 as the base year, calculate the: i) Nominal GDP in 2021 ii) Real GDP in 2020 and 2021 i) Real GDP Growth Rate in 2021 iv) Nominal GDP per Capita in 2021 if the population is 550.arrow_forwardRefer to the table below for a very simple economy producing three goods: movies, pizzas and cars. Steel panels are needed for car production, cheese is necessary for making pizzas and CGI service is used for movie production. What is the nominal GDP for the economy in 2021? What was the nominal GDP in 2016? What is the real GDP in 2021 using 2016 prices as base year prices? What is the real GDP growth rate between 2016 and 2021?arrow_forward
- If the GDP deflator in 2020 equals 2 and nominal GDP in 2020 equals $20 trillion, what is the value of real GDP in 2020?arrow_forwardAn economy produces three products, bags, computers and shirts. The prices and quantities of these products in 2020 and 2021 are shown in the table below: 2020 2021 Price Price Quantity Quantity 300 $10 $12 330 Bags Computers $600 100 $650 110 Shirts $18 2,000 $20 2,200 2020 2021 Measure the nominal and real GDP for 2019 and 2020, using 2020 as the base year. Measure the nominal and real GDP growth rate in 2021. Which value is more accurate in measuring the growth rate of the economy? Explain. (b) The information on price and quantity of three products consumed by a typical household in the year 2020 and 2021 is given by the table below 2020 2021 Price Quantity Price 10 Quantity $5 $5.50 12 Fish Beef $10 5 $11 4 Train Ride $8 20 $9 22 Using 2020 as the base year, measure the CPI for 2021 and the inflation rate in 2021. Does this inflation rate correctly measure the cost of living changes for households in 2021? Explain.arrow_forwardWhich of the components of GDP must increase if we are to experience greater rates of economic growth? If the illegal drug trade was legalized what would happen to GDP? What would happen to GDP if a significant number of house-spouses who were previously staying home to care for their children began taking jobs and placing their children in day-care? Would the nation's well-being necessarily be better off?arrow_forward
- Determine whether the following scenarios would increase, decrease or have no impact on potential GDP in the country of Boxtown: A. Access to capital like machinery for workers is reduced B. Boxtown's workers have more and better capital available C. Households in Boxtown decide to save more and consume less 1. No impact on potential GDP 2. Increase potential GDP 3. Decrease potential GDParrow_forwardExplain why the growth rate in GDP in current prices does not provide information about how quickly the economy is really growing.arrow_forwardFrance produces two goods: milk and wheat. Below is a table showing prices and quantities of output for three years: Year Price of milk Quantity of milk Price of wheat Quantity of wheat 2019 €1 200 €2.9 300 2020 €1.2 250 €3 330 2021 €1.4 280 €3.2 375 The nominal GDP for 2021 is Assuming 2019 to be the base year, the real GDP for 2021 is GD deflator for 2021 is a) France's Office of National Statistics decides to determine the following representative bundle of goods and services purchased by a typical consumer: 5 milk products and 4 wheat products. The CPI in 2021 (assume 2019 to be the base year) is The yearly inflation rate for 2021 isarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning