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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