Homework Answers
3.
* Inflation Rate(IR)= (CPI2-CPI1)/CPI1
CPI1 is in the first period
CPI2 is the CPI in second period
Here, CPI1=200 CPI2=210
IR= (210-200)/200 = 10/200 = 0.05
There for inflation rate is 0.05 0r 5%
* Real Interest Rate(RIR)= Nominal interest rate - inflation rate
Here, Nominal interest rate=3% and inflation rate= 5%
RIR= 3%-5% =-2%
There for the real interest rate here is -2%
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3. Given price index of 200 for 2010 and a price index of 210 for 2011,...
Real-Time Data Analysis Exercise* Calculating an Inflation Rate. The U.S. had a price index of 218.1...
Real-Time Data Analysis Exercise* Calculating an Inflation Rate. The U.S. had a price index of 218.1 in 2010 and 224.9 in 2011. What is the inflation rate between 2010 and 2011? Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. The inflation rate between 2010 and 2011 is □ percent (Enter your response rounded to one decimal place and include a minus sign if appropriate)
2010 Prices 2010 Quantity 2011 Prices 2011 Quantity 2012 Prices 2012 Quantity Apples $3 5 $3...
2010 Prices 2010 Quantity 2011 Prices 2011 Quantity 2012 Prices 2012 Quantity Apples $3 5 $3 11 $3 8 Oranges $2 9 $9 3 $1 10 Nominal GDP Real GDP A. Calculate the nominal and the real GDP in each year for the economy. 2010 is your base year. B. If the real GDP was $150 in 2013 and $182 in 2014, what would the GDP growth rate would be? What would this mean? C. If the nominal GDP was $250 in 2014...
21. In 2012, newspapers reported that the annual Consumer Price Index in 2011 was 120.0. From...
21. In 2012, newspapers reported that the annual Consumer Price Index in 2011 was 120.0. From this, we can conclude that a typical market basket in 2011 more than the same market would have cost basket purchased in a. 20%; the base year b. 120%; the base year c. 120%; 2010 d. 20%; 2010 22. The table below gives information on the the prices of three common school supplies in 2010 and 2011 and the quantities of each school supply...
1. Calculating inflation using a simple price index Consider a fictional price index, the College Student...
1. Calculating inflation using a simple price index Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012. The cost of each item in the basket and the total cost of the basket are shown for 2010. Perform these same calculations for 2011 and 2012,...
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 (7.8 total points): Price in 2000 Wheat Automobiles Chairs Quantity produced in 2000 100 200 400 $5 $40,000 $10 a) Calculate nominal GDP in year 2000. 5 points) b) Suppose prices doubled by 2010 but production stayed the same. Calculate the...
1. The index used to measure inflation is the a. consumer price index. b....
1. The index used to measure inflation is the a consumer price index. b. producer price index. c. wholesale price index. d. GDP deflator. 2. The price index in year 2 is 110 and the price index in year 3 is 115. The rate of inflation between years 2 and 3 is a. 1.04%. b. 2.04%. c. 4.17%. d. 4.55% 3. The situation that occurs when the inflation rate falls is called a. deflation b. disinflation c. stagflation d. inflation 4. The situation that occurs when the price level falls is called a. deflation b. disinflation c. stagflation d. inflation 5. The situation that occurs when...
9. Suppose you want to have $2,000,000 in 20 years and can obtain a 20% interest...
9. Suppose you want to have $2,000,000 in 20 years and can obtain a 20% interest rate. How much money would you need to save today? Given the following: Year Corn-P Corn-Q Beer-P Beer-Q 2010 1.50 200 4.00 1000 2011 1.75 210 4.25 1100 2012 1.80 220 4.50 900 What is real GDP each year (in 2010 dollars)? What is nominal GDP? What is the GDP deflator? What is the GDP growth rate from the pervious year in 2011 and...
Use the following table for a hypothetical single-product economy. Assume that 2010 is the base year....
Use the following table for a hypothetical single-product economy. Assume that 2010 is the base year. YEAR Quantity Price per unit Price Index Nominal GDP Real GDP 2010 100 10 2011 120 20 2012 125 25 2013 130 30 2014 140 40 2015 150 50 2016 200 55 2017 205 60 Complete the table by calculating the Price index, Nominal GDP and Real GDP.
Consider the following partial economic information for a country where the value of the Gross Domestic...
Consider the following partial economic information for a country where the value of the Gross Domestic Product Deflator (GDPD) is the same as the Consumer Price Index (CPI) and hence generally referred to as the Price Index. The birth rate, mortality rate, and net migrate rate are such that the population growth rate is 0%. 2010 nominal GDP (Billions $): 4486.0 price index: 108 nominal wages ($): 40,000 2011 nominal GDP ($billions): 4710 price index: 112 nominal wages ($): 40,800...
Explain how the Consumer Price Index is calculated. The average person in 2010 buys 10 apples...
Explain how the Consumer Price Index is calculated. The average person in 2010 buys 10 apples at $4 each, and 10 bananas at $6 each. In 2011 apples rise to $5 each and bananas rise to $7 each. Calculate the inflation rate. Explain one reason why the CPI might be biased, and whether it would overestimate or underestimate inflation.
Real-Time Data Analysis Exercise* Calculating an Inflation Rate. The U.S. had a price index of 218.1 in 2010 and 224.9 in 2011. What is the inflation rate between 2010 and 2011? Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. The inflation rate between 2010 and 2011 is □ percent (Enter your response rounded to one decimal place and include a minus sign if appropriate)
21. In 2012, newspapers reported that the annual Consumer Price Index in 2011 was 120.0. From this, we can conclude that a typical market basket in 2011 more than the same market would have cost basket purchased in a. 20%; the base year b. 120%; the base year c. 120%; 2010 d. 20%; 2010 22. The table below gives information on the the prices of three common school supplies in 2010 and 2011 and the quantities of each school supply...
1. Calculating inflation using a simple price index Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012. The cost of each item in the basket and the total cost of the basket are shown for 2010. Perform these same calculations for 2011 and 2012,...
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 (7.8 total points): Price in 2000 Wheat Automobiles Chairs Quantity produced in 2000 100 200 400 $5 $40,000 $10 a) Calculate nominal GDP in year 2000. 5 points) b) Suppose prices doubled by 2010 but production stayed the same. Calculate the...
9. Suppose you want to have $2,000,000 in 20 years and can obtain a 20% interest rate. How much money would you need to save today? Given the following: Year Corn-P Corn-Q Beer-P Beer-Q 2010 1.50 200 4.00 1000 2011 1.75 210 4.25 1100 2012 1.80 220 4.50 900 What is real GDP each year (in 2010 dollars)? What is nominal GDP? What is the GDP deflator? What is the GDP growth rate from the pervious year in 2011 and...
Use the following table for a hypothetical single-product economy. Assume that 2010 is the base year. YEAR Quantity Price per unit Price Index Nominal GDP Real GDP 2010 100 10 2011 120 20 2012 125 25 2013 130 30 2014 140 40 2015 150 50 2016 200 55 2017 205 60 Complete the table by calculating the Price index, Nominal GDP and Real GDP.
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