Question

For the all questions on the assignment, you'll work with the same data. Consider an economy in which production and prices for three years (2014, 2015, and 2016) are summarized in the following table: Food Price of Shelter Price of Medication Price of Year Produced Food Produced Shelter Produced Medication 2014 20,000 $2.10 8000 $40 600 $50 2015 21,500 $2.50 8200 $40 650 $100 2016 24,000 $2.70 8400 $40 1000 $120 Economists treat 2014 as the base year in their calculations. They have determined that the average citizen consumes 30 units of food, 12 units of shelter, and 6 units of medication per year. You will calculate several values over the next several questions. For each, remember that following instructions in formatting and rounding is essential to get points. Please double check the assignment instructions and consult the math review (and/or me) for any further questions, First, calculate nominal GDP for 2016. 520,800

Answer 1

1) Nominal GDP in 2016 = 24000*2.7+8400*40+1000*120 = 64800+336000+120000 = 520800

2) Real GDP for 2015 with 2014 as the base year = 21500*2.1+8200*40+650*50 = 45150+328000+32500 = 405650

3) GDP deflator for 2014 = Nominal GDP/Real GDP*100 =100 as 2014 is the base year, Nominal GDP=Real GDP so GDP Deflator would be 100.

4) Cost of the makret basket in 2015 = base year quantity*Current year price

= 20000*2.5+8000*40+600*100

= 50000+320000+60000

= 430000

As per HOMEWORKLIB RULES, the first four parts are answered.