Question : 66) Use the formula for the GDP deflator to explain : 1244695

 

66) Use the formula for the GDP deflator to explain how it is affected by an increase in prices in the economy. If the value of the deflator equals 100, what does that tell you about that year with respect to the base year?

 

Table 12-21

                                                      2011                                                 2013

Product

Quantity

Price

Quantity

Price

Hats

   200

$20

   250

$21

French fries

2,000

   1

2,300

   2

Digital  cameras

    40

200

    50

140

 

67) Refer to Table 12-21. Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2013, using 2011 as the base year. Show your work.

 

Table 12-22

                                 2009                                2012                              2013

Product

Quantity

Price

Quantity

Price

Quantity

Price

MP3s

    40

$250.00

     45

$200.00

    50

$150.00

Tacos

2,000

       2.00

2,200

      2.25

2,300

      2.40

Coats

  300

     50.00

   310

    52.00

  350

    55.00

 

68) Refer to Table 12-22. Consider the data above for a simple economy: Using 2009 as the base year, calculate nominal GDP, real GDP, and the GDP deflator for 2013. Show your work.

 

Table 12-23

                                           2007                                2013

Product

Quantity

Price

Quantity

Price

Pizzas

          100

           $10

          120

           $12

Haircuts

            50

             15

            45

             20

Backpacks

          200

             40

          210

             45

 

69) Refer to Table 12-23. Suppose that a very simple economy produces three goods: pizzas, haircuts, and backpacks. Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table above. Use the information to compute real GDP in the year 2007 and 2013. Assume that 2007 is the base year. Is output higher in 2013 or 2007? Why?

 

 

Table 12-24

 

   2007

 

   2013

 

Product

Quantity

Price

Quantity

Price

Pizzas

          100

           $10

          120

           $12

Haircuts

            50

             15

            45

             20

Backpacks

          200

             40

          210

             45

 

70) Refer to Table 12-24. Suppose that a very simple economy produces three goods: pizzas, haircuts, and backpacks. Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table above. Use the information to compute real GDP in the year 2007 and 2013. Calculate real GDP in 2013 assuming the base year is 2007. Do the same calculation assuming the base year is 2013. Are the calculations different? Why?

 

 

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