ECON.TODAY (COMPLETE)-TEXT ONLY
18th Edition
ISBN: 9780133882285
Author: Miller
Publisher: PEARSON
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Chapter 7, Problem 9P
To determine
The value of the student
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Say that the bundle of goods purchased by a typical consumer in the base year consisted of 20 gallons of milk at a price of $1 per gallon and 15 loaves of bread at a price of $2 per loaf. What would the price index be in a year in which
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milk cost $3 per gallon and bread cost $2 per loaf?
milk cost $2 per gallon and bread cost $4 per loaf?
Suppose that the residents of Windhoek spend all of their income on cauliflower,
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of broccoli for N$750 and 500 carrots for N$500. In 2020 they buy 75 heads of
Cauliflower for N$2250, 80 bunches of broccoli for N$1200 and 500 carrots for N$1000.
Suppose that the base year is 2019.
(a) Find nominal GDP and real GDP for 2019 and 2020. (4)
(b) What is the CPI in both years? (6)
(c) What is the inflation rate? ( 4)
(d) Find real growth rate (2)
(e) Which do you think has a greater effect on the CPI: a 10 percent increase in the
price of chicken or a 10 percent increase in the price of cars? Why? (4)
Assume a hypothetical economy that produces only one good – Peanut Butter. In year 1, the quantity produced is 4 packs and the price is Rs.400 per pack. In year 2, the quantity produced is 5 packs and the price is Rs.500 per pack. In year 3, the quantity produced is 6 packs and the price is Rs.600 per pack. Year 1 is the base year.
What is the percentage growth rate of real GDP from year 2 to year 3?
What is the inflation rate as measured by the GDP deflator from year 2 to year 3?
In this one-good economy, how might you have answered parts (d) and (e) without first answering parts (b) and (c)?
Chapter 7 Solutions
ECON.TODAY (COMPLETE)-TEXT ONLY
Ch. 7 - Prob. 7.1LOCh. 7 - Prob. 7.2LOCh. 7 - Prob. 7.3LOCh. 7 - Prob. 7.4LOCh. 7 - Prob. 7.5LOCh. 7 - Prob. aFCTCh. 7 - Prob. bFCTCh. 7 - Prob. cFCTCh. 7 - Prob. dFCTCh. 7 - Prob. eFCT
Ch. 7 - Prob. 1CTQCh. 7 - Prob. 2CTQCh. 7 - Prob. 1FCTCh. 7 - Prob. 2FCTCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16P
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