Homework Answers
Answer 26
The correct answer is (b) The Inflation rate calculated by using the CPI is higher than the Inflation rate calculated by using the GDP Deflator
GDP deflator is given by (Nominal GDP/Real GDP)*100
Here Base Year is 1999 and hence Let GDP deflator in 1999 = 100
Lets Calculate Nominal GDP in 2000:
Nominal GDP in 2000 = Sum of Prices in 2000*Quantities of all goods
= 2*2000 + 4*4000 + 100*20 = 22000
Real GDP in 2000 = Sum of Prices (in 1999)*Quantities of all goods (in 2000)
= 1*2000 + 1*4000 + 100*20 = 8000
Hence GDP deflator in 2000 = (22000/8000)*100 = 275
Hence Inflation using GDP deflator = ((GDP deflator in 2000 - GDP deflator in 1999) / (GDP deflator in 1999)) * 100
= ((275-100)/100)*100 = 175
Now Lets Calculate CPI in 2000
CPI in 2000 = (Market value of Basket in 2000/Market value of Basket in 2000) * 100
Basket = 1 Hotdog and 1 Tshirt
So, Market value of Basket in 2000 = 1*2 + 1*4 = 6
Market value of Basket in 1999 = 1*1 + 1*1 = 2
Hence, CPI in 2000 = (6/2)*100 = 300
CPI in 1999(Base Year) = 100
Hence Inflation using CPI = ((CPI in 2000 - CPI in 1999)/(CPI in 1999))*100
= ((300 - 100) / 100) *100 = 200
Hence, Inflation using CPI > Inflation using GDP deflator
Hence Inflation rate calculated by using the CPI is higher than Inflation rate calculated by using the GDP Deflator
Hence the correct answer is (b) The Inflation rate calculated by using the CPI is higher than the Inflation rate calculated by using the GDP Deflator
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question 1: nominal GDP for 2016 question 2: real gdp for 2015 question 3: GDP deflator...
question 1: nominal GDP for 2016
question 2: real gdp for 2015
question 3: GDP deflator for 2014
question 4: calculate cost/price of the market basket for
2015
question 5: calculate CPI for 2016
question 6: use CPI to calculate the inflation rate
from 2014 to 2015
question 7: which person makes more in
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please help me
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please include detailed steps with answer
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question 1: nominal GDP for 2016
question 2: real gdp for 2015
question 3: GDP deflator for 2014
question 4: calculate cost/price of the market basket for
2015
question 5: calculate CPI for 2016
question 6: use CPI to calculate the inflation rate
from 2014 to 2015
question 7: which person makes more in
inflation-adjusted terms or (real) terms? would it change if nick
made 82k a year instead?
question 8: best too look at pic.
Note: please show work...
2. Download the annual real GDP and GDP data of the United States 1950-2018 from FRED. For the real GDP, the data online is chain-weighted and uses 2012 as the base year. In the lecture hursday, I showed you the detailed method and calculated the new chain-weighted real GDP when 1990 is the base year. You are required to calculate a new sequence of chain- weighted real GDP given a new base-year. The base year you should use in your...
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