ECON.TODAY (COMPLETE)-TEXT ONLY
18th Edition
ISBN: 9780133920161
Author: Miller
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 9P
To determine
The value of the student price index in
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
milk cost $2 per gallon and bread cost $1 per loaf?
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,
broccoli and carrots. In 2019 they buy 100 heads of cauliflower for N$2000, 50 bunches
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
Knowledge Booster
Similar questions
- Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $9.00. In year one, $72.00 will buy(0.11, 0.13, 4.5, 8, 9) baskets, and in year two, $72.00 will buy (0.11, 0.13, 4.5, 8, 9) baskets. .arrow_forwardConsider an economy that produces only chocolate bars. In year 1, the quantity produced is 10 bars and the price is Rs.400 per bar. In year 2, the quantity produced is 12 bars and the price is Rs.500 per bar. In year 3, the quantity produced is 15 bars and the price is Rs.600 per bar. Year 1 is the base year. What is the GDP deflator for year 2? What is the GDP deflator for year 3? What is the percentage growth rate of real GDP from year 2 to year 3?arrow_forwardThe base year in a country for the calculation of national income data is 2012. Real GDP in this country grows at the rate of 5 percent per year. The GDP deflator in this country increases at the rate of 2 percent per year. If the real GDP in this country in 2011 was 20,000 manats, what would be the value of nominal GDP in 2013? Nominal GDP in 2013 = manats. Do you know what country uses manat as its currency? Part B: The base year in a country for the calculation of national income data is 2012. Real GDP in this country grows at the rate of 5 percent per year. Nominal GDP in this country increases at the rate of 8 percent per year. If the real GDP in this country in 2011 was 50,000 tenges, what would be the value of GDP deflator in 2013? GDP deflator in 2013 = tenges. Do you know what country uses tenge as its currency?arrow_forward
- Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 3 bars and the price is $4. In year 2, the quantity produced is 4 bars and the price is $5. In year 3, the quantity produced is 5 bars and the price is $6. Year 1 is the base year.What is nominal GDP for each of these three years?What is real GDP for each of these years?What is the GDP deflator for each of these years?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?arrow_forwardAs a first step in computing the consumer price index (CPI), a survey of consumers is done to determine the “basket of goods” purchased by a typical consumer. Suppose that 2009 is given as the base year and, consistent with the data shown in the table above, it was decided that the basket of goods in this economy should consist of one unit of food and two units of clothing. I. Using 2009 as the base year,what is the CPI in each year: 2009, 2010, and 2011? ii. What is the inflation rate in 2010 and 2011?arrow_forwardnominal gdp in year 1 is 500. if gdp deflator doubles in year 8 while real output increases by 60 percent, what's nominal output in year 8arrow_forward
- Consider an economy that produces only four types of fruit: apples, oranges, pineapples, and bananas. In the base year (2012), the production and price data were as follows: Fruit Quantity Price Apples 3,000 bags $2 per bag Bananas 6,000 bunches $3 per bunch Pineapples 4,000 $1.5 per Oranges 8,000 bags $4 per bag In the current year(2013), the production and price data are follows: Fruit Quantity Price Apples 4,000 bags $3 per bag Bananas 14,000 bunches $2 per bunch Pineapples 7,500 $2 per Oranges 32,000 bags $5 per bag (a) Calculate the nominal GDP in the current year and the base year. What is the percentage increase since the base year?(b) Calculate the real GDP in the current year and the base year. By what percentage does real GDP increase from the base year to the current year?(c) Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?(d) Would you say…arrow_forwardSuppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $7.00. In year two, the price of the same basket is $6.00. From year one to year two, there is at an annual rate of . In year one, $21.00 will buy baskets, and in year two, $21.00 will buy baskets. This example illustrates that, as the price level falls, the value of money .arrow_forwardSuppose there are three goods in an economy, namely pencils, mobile phones and capital goods for production. In both Year 1 and Year 2, the production of goods and services in this economy consists of 300 pencils, 200 mobile phones and 100 units of capital goods used for production. Answer the following questions. Please show all the steps you use to arrive at your answers. i Find the nominal GDP for the current year and base year. ii What is the percentage increase in the CPI? iii What is the percentage increase in the GDP deflator?arrow_forward
- Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 5 bars and the price is Rs.400 per bar. In year 2, the quantity produced is 6 bars and the price is Rs.500 per bar. In year 3, the quantity produced is 7 bars and the price is Rs.600 per bar. Year 1 is the base year. What is nominal GDP for year 1? What is real GDP for year 2? What is real GDP for year 3? What is the GDP deflator for year 2?arrow_forwardYou are now required to compute the consumer price index (CPI) and the inflation in one village. To do this task, you go to that village to collect data of households’ consumption in that village. After collecting data, you find that households in this village consume a standard basket of 3kg of rice, 1.5kg of meat and 3kg of vegetable and the prices of these products are given below: a) CPI in Jan 2017, in Feb 2017, and in Mar 2017 by taking Jan 2017 as the base month.b) Inflation rate from Feb to Mar 2017arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning