Question

In: Economics

This problem set counts 25% to the total mark. All questions have equal weight. Due date...

This problem set counts 25% to the total mark. All questions have equal weight. Due date Thursday October 15th 2020 (end of week 7). Please upload in SafeAssign.
1. Comment on the differences between measuring inflation by the GDP de- flator and the CPI. Country Alpha relies heavily on its export industry. Why could that cause the inflation based on the GDP deflator and the CPI inflation to differ? Country Beta is completely self sufficient and has no governments spending. Why could the two inflation rates still differ?

Solutions

Expert Solution

1. Inflation can be defined as the general rise in price of goods and services during a specific period, usually one year. Inflation can be calculated using GDP deflator and CPI. However, the inflation rate so calculated is different in both methods.

GDP deflator takes into account all the final goods and services produced in the geographical boundaries of a country whereas the CPI considers only a fixed basket of goods and services that are predominantly consumed by the people. Thus GDP deflator excludes imports and includes exports whereas CPI may include import and excludes export.

For country Alpha, the inflation based on GDP deflator will be different than inflation based on the CPI. This is because most of the goods and services are exported (export oriented economy) and exported items are included in GDP deflator but not in CPI.

For country Beta, the inflation based on GDP deflator will be different than inflation based on the CPI. This is because although country is self sufficient i.e. there is no import and export, all goods and services are included in for calculation of GDP deflator but only specific goods and services are included for calculation of CPI.


Related Solutions

INTRUCTIONS: Answer all 4 questions. Assignment should be submitted in Blackboard by the due date. This...
INTRUCTIONS: Answer all 4 questions. Assignment should be submitted in Blackboard by the due date. This is a 25 point assignment – six (6) points for each correct answer and 1 point for answering all 4 questions. Partial credit will be given if you give the wrong answer but show the correct formula. A firm has the following capital structure: 1. Bonds with market value of $3,000,000 2. Preferred Stock with a market value of $2,000,000 3. Common stock, of...
Chapter 5 Questions Bench Mark Data set Assuming the bench mark data set has a normal...
Chapter 5 Questions Bench Mark Data set Assuming the bench mark data set has a normal distribution with a mean 65.54 and a standard deviation of 6.05 Answer the Following Questions If Dennis scores 69 on the bench mark score, what is his percentile rank? Z = 69 – 65.54 / 6.04             Z= .57 21.57 + 50 = 71.57% If Dennis Scores a 62 what percentage of students did better than Dennis? Z = 62 – 65.54/ 6.05 Z= -.58...
Question 1: Consider the following data: Problem Set 5 Foundations of Finance Due Date: 26 October....
Question 1: Consider the following data: Problem Set 5 Foundations of Finance Due Date: 26 October. 2020 Expected Return 0.16 = 16% 0.14 = 14% 0.12 = 12% Standard Deviation 12% A Fund B Fund C Fund The correlation between the returns on the A Fund and the C Fund is .7. The rate on T-bills (which will represent the “risk free” asset) is 6%. Which of the following portfolios would you prefer to hold in combination with T-bills and...
GRADED PROBLEM SET #5 Answer each of the following questions completely. There are a total of...
GRADED PROBLEM SET #5 Answer each of the following questions completely. There are a total of 20 points possible in the assignment. (8 pts) Based on past results found in the Information Please Almanac there is a 0.1919 probability that a baseball World Series will last four games, a 0.2121 probability that it will last five games, a 0.2223 probability that it will last six games, and a 0.3737 probability that it will last seven games. Does the given information...
Week 3: Supply and Demand: Price Elasticity Problem #2 Due Date: Due by the end of...
Week 3: Supply and Demand: Price Elasticity Problem #2 Due Date: Due by the end of Week 3 at 11:59 pm, ET. Price plays a significant role in quantity demanded and quantity supplied. Consumers and sellers respond differently to changes in the price of different types of goods and the situation. To measure the responsiveness of consumers and sellers to changes in the price of a good, some rules of thumb are given. These rules of thumb are said to...
Question 25 Problem Set 2: Independent Samples T-Test Use the following information to answer questions 25-27:...
Question 25 Problem Set 2: Independent Samples T-Test Use the following information to answer questions 25-27: The Tronderlag Foundation, a research think tank based in Norway, has asked your advice in regard to a matter involving inferential statistics. The foundation has studied the dependency that Scandinavian and Southern European countries have on exports for their Gross Domestic Product. The foundation collected data on five Scandinavian countries and six Southern European countries regarding the percentage of GDP that is derived from...
(Side note: I'm not sure if this counts as one question or not but all questions...
(Side note: I'm not sure if this counts as one question or not but all questions are based on the original case and numbers and felt as splitting the questions would be counter-productive) Case: A small convenience store chain is interested in modeling the weekly sales of a store, y, as a function of the weekly traffic flow on the street where the store is located. The table below contains data collected from 20 stores in the chain. Store Traffic...
Problem set 2: use the following table to answer questions 4-7 (40 pts total): # of...
Problem set 2: use the following table to answer questions 4-7 (40 pts total): # of children Frequencies 0 472 1 218 2 175 3 320 4 187 5 128 6 47 7 33 8 20 N 1,600 Please find the mean for numbers of children in this distribution (20 pts). # of children Frequencies How many # of children in each category: # of Children * Freq. in each column 0 472 0*472=0 1 218 2 175 3 320...
Econ 178-001 International Trade Problem Set 1 All of the questions in this assignment refer to...
Econ 178-001 International Trade Problem Set 1 All of the questions in this assignment refer to material found in Chapter 9 on tariffs and quotas. 1. Home is a small country with a demand curve for wheat described by QD = 1000 – 100P. Its supply curve is described by QS = 100P. *please part e-h only* a. Graph this market. What is the equilibrium price and quantity in the absence of trade? b. Calculate the consumer and producer surplus...
1. With mutation set to 0, migration set to 0, all genotypes with equal fitness, and...
1. With mutation set to 0, migration set to 0, all genotypes with equal fitness, and assortative mating set to 0, what would you expect to happen and why? a. allele frequencies should change dramatically, because microevolution is occurring b. new alleles will be entering the population, which will change allele frequencies c. some phenotypes are more adaptive than others, so they will increase in frequency over generations d. allele frequencies should stay about the same, because microevolution is not...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT