Question

In: Economics

Assume final goods produced in country AAA in 2017,2018,and 2019 and their prices are shown as follows: ...

Assume final goods produced in country AAA in 2017,2018,and 2019 and their prices are shown as follows:

Year	Product A quantity	Product A price	Product B quantity	Product B price
2017	1000	10	750	15
2018	2500	30	3000	35
2019	5000	40	5500	45

Calculate nominal GDP in years 2017, 2018, and 2019.
Calculate Real GDP for years 2017,2018, and 2019 using Year 2017 as the base year.
Using the real GDP figures calculated in (b) above, calculate annual growth rate of output for years 2018 and 2019.
Calculate GDP deflator for years 2017I to 2019 using Year 2017 as the base year.
Calculate CPI price index for years 2017 to 2019 using Year 2017 as the base year.
Calculate inflation rate for years 2018 and 2019 using both GDP deflators and CPI indexes calculated in parts (d) and (e).

Expert Solution

Here,

Year	Product A	Product A Price	Product B	Product B Price
2017	1000	10	750	15
2018	2500	30	3000	35
2019	5000	40	5500	45

1)

So Nominal GDP for 2017 = 1000*10+ 750*15 = 21250

Similarly Nominal GDP for 2018 = 180000

Similarly Nominal GDP for 2019 = 475000

2)

For Real GDP Prices of 2107 are considered so table looks like below

Year	Product A	Product A Price	Product B	Product B Price
2017	1000	10	750	15
2018	2500	10	3000	15
2019	5000	10	5500	15

So Real GDP for 2017 = 1000*10+ 750*15 = 21250

Similarly Real GDP for 2018 = 70000

Similarly Real GDP for 2019 = 132500

3)

Outpur Growth Rate using Real GDP

For 2018 = 70000/ 21250 = 329.4118%

For 2019 = 132500/ 70000 = 189.2857%

4)

GDP Deflator For 2018 = Nominal GDP for 2018/ Real GDP for 2018 = 180000/ 70000 * 100 = 257.1429

GDP Deflator For 2019 = Nominal GDP for 2019/ Real GDP for 2019 = 475000/ 132500 * 100 = 358.4906

5)

Price in 2017 = 10 + 15 = 25

Price in 2018 = 30+35 = 65

Price in 2019 = 40+45 = 85

CPI in 2018 = 65/25*100 = 260

CPI in 2019 = 85/25*100 = 340

6)

Inflation using CPI

2018 = 260/100*100 = 260%

2019 = 340/260*100 = 130.7692%

Inflation Using GDP Deflator

2018 =(257.1429 - 100)/100*100 = 157.1429

2019 =(358.4906 - 257.1429)/ 257.1429*100 = 39.143

Rahul Sunny answered 8 months ago

Gross Domestic Product (GDP) is the final goods and services produced in an economy or country,...

Gross Domestic Product (GDP) is the final goods and services produced in an economy or country, within a specific period of time. It does not include the distribution of resources in the economy (Mankiw 2017). After viewing the power point provided I would say that using the GDP method would not give a good measurement of the national economic well-being. For example, GDP does not include intermediate goods: this is when an ingredient or service is used to help make...

GDP is the total market value of goods and services produced in a country in a...

GDP is the total market value of goods and services produced in a country in a year. Google the GDP's of three countries. Everyone should use different countries. Use one advanced economy, one developing country, and then a country on a different continent than the first two countries you found. What I want to know and you need to share is current (1) total gdp, (2) gdp per capita and (3) gdp growth rate for the last year. Explain what...

The following are the values of goods and services produced in 2018 and 2019 utilizing the...

The following are the values of goods and services produced in 2018 and 2019 utilizing the prices prevailing in those two years. Compute the Chain-weighted Real GDP for 2019. (Show your work). Prices Utilized Values of Goods and Services of the years ($million) 2018 2019 2018 112.4 138.2 2019 118.3 146.5

GDP is defined as the market value of all final goods and services produced within a...

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. Market values are estimated based on price. However, in Kuwait, in the Friday market used goods are sold and some of them as an input to the production of final goods and services. Critically evaluate how do the Friday market activities effect nominal and real GDP, standard of living and residence happiness in Kuwait? Sri Lanka is...

Consider the specific factors model. In the country Youland, two goods are produced: degrees (d) and...

Consider the specific factors model. In the country Youland, two goods are produced: degrees (d) and fun (f). Both goods are produced using a combination of labour and a specific factor for each good. The specific factor for degrees is ability (a) while the specific factor for fun is games (g). Both goods are produced with diminishing returns, as is standard. Explain why, in equilibrium, the absolute value of the slope of the PPF must equal the relative price of...

Suppose there are two goods, cameras and DVRs, produced in a country. Cameras (Qc) are labor-intensive...

Suppose there are two goods, cameras and DVRs, produced in a country. Cameras (Qc) are labor-intensive and DVRs (Qd) are capital-intensive in their production. The wage paid to labor is w and the rent on capital is r. We assume the country to be capital-abundant and the relative price of cameras to price of DVRs is Pc . The country undertakes an agreement withPd its trading partner which lowers the price of imports, leading to higher levels imports. (a) Write...

Assume that a country produces two goods, agriculture (which requires land and labor) and manufactured goods...

Assume that a country produces two goods, agriculture (which requires land and labor) and manufactured goods (which requires labor and capital), and is currently in autarky equilibrium. The country just finds that the international price ratio of agriculture relative to manufactured goods, i.e., PA/PM, in the world market is LOWER than the price ratio in its domestic market. Use production-possibilities frontier (PPF) and indifference curves to show how this country may gain from trade and identify the trade triangle, including...

Important Vocab GDP Currency value of all final goods and services produced within a country’s borders...

Important Vocab GDP Currency value of all final goods and services produced within a country’s borders Real GDP Currency value of all final goods and services produced within a country’s borders minus the effects of inflation Inflation A general rise in the price level of an economy Consumption Dollar value of all goods and services purchased by households Investment Dollar value of all goods and services purchased by business for the purpose of using in their business Government Spending Dollar...

Assume the distribution of home selling prices follows a normal distribution. for this area the mean...

Assume the distribution of home selling prices follows a normal distribution. for this area the mean selling price is $95,140 and the standard deviation of the selling price is $13,100. Let S be the home selling price. For a randomly selected home find P(S>$100,000). The answer is approx. = .6447. I just really need to know how to set this question up in a TI-84 calculator PLEASE! It's urgent!

Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets...

Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets are always in equilibrium. What are the effects of each of the following on output, the real interest rate, and the current price level? A temporary increase in government purchases. A reduction in expected inflation. A temporary increase in labor supply. An increase in the interest rate paid on money.