MACROECON ETXT W/MYECONLAB+STDNT PKT>CI
7th Edition
ISBN: 9780136547853
Author: HUBBARD/TIERNE
Publisher: PEARSON C
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Chapter 8, Problem 8.1.7PA
To determine
Final Goods and services.
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The magazine Women of China reported that Chinese women in big cities spent 63% of their income on consumer goods last year, up from a meagre 26% in 2007. Clothing accounted for the biggest chunk of that spending, at nearly 30%, followed by digital products such as cellphones and cameras (11%) and travel (10%). Chinese consumption as a whole grew faster than the overall economy in the first half of the year and is expected to reach 42% of GDP by 2020, up from the current 36%.
Source: The Wall Street Journal, August 27, 2010
If the economy had been operating at a full employment equilibrium,
(a) Describe the macroeconomic equilibrium after the rise in consumer spending.
(b) Explain and draw a graph to illustrate how the economy can adjust in the long run to restore a full-employment equilibrium.
Assume an economy in which only broccoli and cauliflower are produced. In year 1, 500 million pounds of broccoli are produced and consumed and its price is $0.50 per pound, while 300 million pounds of cauliflower are produced and consumed and its price is $0.80 per pound. In year 2, 400 million pounds of broccoli are produced and consumed and its price is $0.60 per pound, while 350 million pounds of cauliflower are produced and consumed and its price is $0.85 per pound.
(a) Using year 1 as the base year, calculate the GDP price deflator in years 1 and 2, and calculate the rate of inflation between years 1 and 2 from the GDP price deflator.
(b) Using year 1 as the base year, calculate the CPI in years 1 and 2, and calculate the CPI rate of inflation.
Briefly discuss five reasons why a rise in real Gross Domestic Product within a country over time does not necessarily mean that living standards have improved.
Chapter 8 Solutions
MACROECON ETXT W/MYECONLAB+STDNT PKT>CI
Ch. 8 - Prob. 8.1.1RQCh. 8 - Prob. 8.1.3RQCh. 8 - Prob. 8.1.4RQCh. 8 - Prob. 8.1.5RQCh. 8 - Prob. 8.1.6PACh. 8 - Prob. 8.1.7PACh. 8 - Prob. 8.1.8PACh. 8 - Prob. 8.1.9PACh. 8 - Prob. 8.1.10PACh. 8 - Prob. 8.1.11PA
Ch. 8 - Prob. 8.1.14PACh. 8 - Prob. 8.2.1RQCh. 8 - Prob. 8.2.2RQCh. 8 - Prob. 8.2.3RQCh. 8 - Prob. 8.2.4PACh. 8 - Prob. 8.2.9PACh. 8 - Prob. 8.2.10PACh. 8 - Prob. 8.3.1RQCh. 8 - Prob. 8.3.2RQCh. 8 - Prob. 8.3.3RQCh. 8 - Prob. 8.3.4PACh. 8 - Prob. 8.3.5PACh. 8 - Prob. 8.3.6PACh. 8 - Prob. 8.3.7PACh. 8 - Prob. 8.3.8PACh. 8 - Prob. 8.3.9PACh. 8 - Prob. 8.3.10PACh. 8 - Prob. 8.4.1RQCh. 8 - Prob. 8.4.3RQCh. 8 - Prob. 8.4.4PACh. 8 - Prob. 8.4.6PACh. 8 - Prob. 8.4.7PACh. 8 - Briefly discuss the accuracy of the following...Ch. 8 - Prob. 8.1RDECh. 8 - Prob. 8.2RDECh. 8 - Prob. 8.6RDECh. 8 - Prob. 8.7RDE
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