2.
Base Year |
||
Fruit |
Quantity |
Price |
Apples |
3000 |
2 |
Bananas |
5000 |
3 |
Oranges |
6000 |
5 |
Nominal GDP in Base Year |
51000 |
Current Year |
||
Fruit |
Quantity |
Price |
Apples |
4000 |
2 |
Bananas |
13000 |
3 |
Oranges |
24000 |
7 |
Nominal GDP in Current year |
215000 |
The percentage increase in Nominal GDP is ((215000-51000)/51000)*100 = 321.6 percent
In the base year, real GDP was 51000
Current Year |
||
Fruit |
Quantity |
Price |
Apples |
4000 |
2 |
Bananas |
13000 |
3 |
Oranges |
24000 |
5 |
Nominal GDP |
167000 |
In the base year, real GDP was 167000.
The percentage increase in Real GDP is ((167000-51000)/51000)*100 = 227.5 percent
The GDP deflator for the base year is 100
The GDP deflator for the current year is Nominal GDP/Real GDP = (215000/167000)*100 =128.7
The inflation rate is 128.7-100 = 28.7 percent
Is primarily due to increase in price of Oranges
3.
Year |
CPI |
Bond Value |
Nominal Interest rate |
2015 |
200 |
500 |
|
2016 |
202 |
525 |
=(202-200))/200)*100=5% |
Actual inflation rate = ((202-100)/100)*100 = 102 percent
Real interest rate = Nominal – Inflation = 5%-2% =3%
Expected inflation rate = 1%
Expected real interest rate = 5%-1%=4%
2 3 Consider an economy that produces only three types of fruit: apples bananas, and oranges....
1 Base Year Fruit Apples Bananas 7,000 bunches Oranges Quantity Price $2 per bag $3 per bunch $5 per bag 4,000 bags 7,000 bags Current Year Fruit Quantity Apples Bananas 15.000 bunches Oranges Price $3 per bag $2 per bunch $7 per bag 5,000 bags 28,000 bags Consider an economy that produces only three types of fruit: apples bananas, and oranges. In the base year (a few years ago), the production and price data are listed in the tables to...
1 23 You are given the following information about an economy: Gross private domestic investment 50 Government purchases of goods and services 35 Gross national product (GNP) 300 Current account balance10 Taxes 60 Government transfer payments to the domestic private sector 30 Interest payments from the government to the domestic private sector10 (Assume all interest payments by the government go to domestic households.) Factor income received from rest of world 6 Factor payments made to rest of world8 Assuming that...
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Q1) Q2) Q3) Imagine that Canada produces only three goods: apples, bananas, and carrots. The quantities produced and the prices of the three goods are listed below: Quantities produced 5 Goods Apples Bananas Carrots Prices ($) 2.00 1.00 10 20 1.50 Instructions: Round your answers to the nearest dollar. a. Canadian GDP is $ b. Suppose a drought hits the province of British Columbia. This drought causes the quantity of apples produced to fall to 2. Assuming that all prices...
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Consider a simple economy that produces two goods: pencils and oranges. The following table shows the prices and quantities of the goods over a three-year period Pencils Oranges Price Price Quantity Quantity (Number of pencils) 110 155 120 (Dollars per pencil) (Dollars per orange) (Number of oranges) Year 2012 2013 2014 150 215 180 Use the information from the preceding table to fill in the following table Real GDP (Base year 2012, dollars) Nominal GDP (Dollars) GDP Deflator Year 2012...
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