Question

EF 12:23 123,629 31%D TODO of + 80 Copyright © Wendy Kei. Redistribution of these materials by any means without permission from the Course Instructor constitutes a breach of copyright and may lead to academic discipline. Part (a): A hurricane in Ontario forces all businesses to shut down for a month. Part (b): Fathers around the country reduce their workweeks to spend more time with their children. Question 5 You are provided with the following information: A B $2 $4 ? ? 50 100 100 50 • Suppose that Country Omics uses the GDP Deflator as a proxy for inflation. Let the base year bex. • Over periods x and y, the inflation rate was 2%. • If the price of B in period y is half the amount of A for the same time period, find the price of A and the price of B in period y.

Answer 1

Qx IPe Pg 50 be 100 be x base Let kehe శల Pruce of Ben beriod 4=Halb the amount of A in feriod y à le= a Nomin al GOP n period x = Soo$ Nominal GDP in perrod y = axioo t9 ex50 100 a t 50l since the base is x, Nominal GAP= Reel GOP= 500$ period x therforefor year beriod GDP Deflator = Nomenel GOP for period g X100 Reel GoP 100 a ts0 le ri00 GOP Deflator for period x Nomenel GOPY100 Real GoP %3D 100 a +5ole Infletion rate= 10o a t50b =100 a +50le 102 x5= 100 a +60 b→510 ÇFromO 100 (a e) +5o l But 2e= a 510 → le = 2.04$ 250 le 510= a=4.08$ a= a le