A small economy produced and consumed only two goods (computers and pies) in Year 1 and...

A small economy produced and consumed only two goods (computers and pies) in Year 1 and Year 2, in the amounts shown in the table below.

[Read the next sentence very carefully.] Year 1 is the base year for all calculation purposes in this question, and we also assume that the official market basket for the CPI is the actual mix of output produced in Year 1.

	Computers		Pies
	Quantity	Price	Quantity	Price
Year 1	30	$1000	100	$10
Year 2	40	$1100	110	$10

Calculate the nominal GDP for Year 1.
Calculate the real GDP for Year 2.
Calculate the inflation rate from Year 1 to Year 2, based on GDP deflator in two years.
Calculate the cost of the basket for Year 1.
Calculate the CPI for Year 2.
Calculate the inflation rate from Year 1 to Year 2, based on CPI in two year

Expert Solution

Rahul Sunny answered 1 year ago

1.Three goods are produced and consumed in an economy during years 1 and 2. The table...

1.Three goods are produced and consumed in an economy during years 1 and 2. The table shows prices (P1 and P2) for each good and the quantities produced (Q1 and Q2) for each good. The base year is year 1. Good P1 Q1 P2 Q2 Milk (gallons) $4.10 40 $4.20 50 Beef (pounds) $1.90 20 $2.20 25 Carrots (bags) $4.50 10 $4.80 15 Enter numbers rounded to two decimal places in each blank. Real GDP in year 1 is $...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

In an economy, there are only two goods (Cars and cycles) produced. The data for last three years is given in the below table. Calculate the nominal and real GDP of three years and then find the GDP deflator for all the three years. Find year on year (YoY) inflation for 2018 and 2019. Note: the base year for this economy is given as 2017. year Price of Car(AED) Number of Car Price of cycle (AED) Number of cycle 2017...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

In an economy, there are only two goods (Cars and cycles) produced. The data for last three years is given in the below table. Calculate the nominal and real GDP of three years and then find the GDP deflator for all the three years. Find year on year (YoY) inflation for 2018 and 2019. Note: the base year for this economy is given as 2017. year Price of Car(AED) Number of Car Price of cycle (AED) Number of cycle 2017...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

In an economy, there are only two goods (Cars and cycles) produced. The data for last three years is given in the below table. Calculate the nominal and real GDP of three years and then find the GDP deflator for all the three years. Find year on year (YoY) inflation for 2018 and 2019. Note: the base year for this economy is given as 2017. year Price of Car(AED) Number of Car Price of cycle (AED) Number of cycle 2017...

1. Suppose that a simple economy produced only three goods: wheat, automobiles, and chairs. The table...

1. Suppose that a simple economy produced only three goods: wheat, automobiles, and chairs. The table below lists the quantity and prices for each of the goods for year 2000 and 2010. Based on table, answer the following questions Quantity produced in 2000 Price in 2000 Wheat 100 $5 Automobiles 200 $40,000 Chairs 400 $10 Calculate nominal GDP in year 2000. Suppose prices doubled by 2010 but production stayed the same. Calculate the nominal value of GDP in 2010. Suppose...

Assume that you live in a simple economy in which only three goods are produced and...

Assume that you live in a simple economy in which only three goods are produced and traded: fish, fruit, and meat. Suppose that on January 1, 2010, fish sold for $3.50 per pound, meat was $4.00 per pound, and fruit was $2.50 per pound. At the end of the year, you discover that the catch was low and that fish prices had increased to $5.00 per pound, but fruit prices stayed at $2.50 and meat prices had actually fallen to...

In year 1 and year 2, there are two products produced in a given economy: apples...

In year 1 and year 2, there are two products produced in a given economy: apples and oranges. Suppose that there are no intermediate goods. In year 1, 10 apples are produced and sold at $4 each, and in year 2, 8 apples are produced and sold at $5 each. In year 1, 2 oranges are sold for $12 each, and in year 2, 5 oranges are sold for $6 each. What is the CPI for year 2 using year...

Consider the simple closed economy of Plantersville with only three goods: computers, peanuts and peanut butter....

Consider the simple closed economy of Plantersville with only three goods: computers, peanuts and peanut butter. There is no government, and no international trade. Note the following very important information: Computers and peanut butter are final goods only. Peanuts are consumed by households as a final good AND are used as an intermediate good by firms in the production of peanut butter. It takes 1/2 pound of peanuts to make each jar of peanut butter. The table below provides ALL the...

In class, we developed a PPF for an economy that produced two goods with no factor...

In class, we developed a PPF for an economy that produced two goods with no factor substitution. This PPF gives some intuition for why the PPF in the the Heckscher-Ohlin Model is curved. a. Imagine an economy makes only clothes (QC) and food (QF) and has two inputs of production: Labor (L) and Capital (K). It takes 4 units of capital and 1 unit of labor to make one unit of clothing. It takes 1 unit of capital and 1...

Suppose a simple economy produces only two goods, pillows and rugs. In the first year, 50...

Suppose a simple economy produces only two goods, pillows and rugs. In the first year, 50 pillows are produced, and sold at $5 each; 11 rugs are produced, and sold at $50 each. In the second year, 54 pillows are produced, and sold for $6 each; 12 rugs are produced, and sold at $52 each. In the third year, 60 pillows are produced and sell for $7.00 dollars each; 14 rugs are produced and sold for 64 dollars each. Calculate...

Question

A small economy produced and consumed only two goods (computers and pies) in Year 1 and...

Solutions

Expert Solution

Related Solutions

1.Three goods are produced and consumed in an economy during years 1 and 2. The table...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

In an economy, there are only two goods (Cars and cycles) produced. The data for last...

1. Suppose that a simple economy produced only three goods: wheat, automobiles, and chairs. The table...

Assume that you live in a simple economy in which only three goods are produced and...

In year 1 and year 2, there are two products produced in a given economy: apples...

Consider the simple closed economy of Plantersville with only three goods: computers, peanuts and peanut butter....

In class, we developed a PPF for an economy that produced two goods with no factor...

Suppose a simple economy produces only two goods, pillows and rugs. In the first year, 50...