Question

Consider an economy that produces and consumes hot dogs and hamburgers. In 2015, the price of...

Consider an economy that produces and consumes hot dogs and hamburgers. In 2015, the price of hotdogs were $2 while the price of hamburgers were $4. In 2020, both goods were sold at $4 each. If 217 hotdogs and 259 hamburgers were sold in both 2015 and 2020, compute the implicit GDP price deflator for 2015. Use 2020 as the base year and note that the base year GDP price deflator is 100.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

GDP price deflator for 2015 = (Nominal GDP for 2015 / Real GDP for 2015)*100

Nominal GDP = Current year quantity * Current year price.

Nominal GDP for 2015 = Quantity of 2015 * Price of 2015

=> Nominal GDP for 2015 = (217 *$2) + (259 * $4)

=> Nominal GDP for 2015 = $434 + $1036

=> Nominal GDP for 2015 = $1470

Real GDP = Currecnt year GDP * Base year price

Real GDP for 2015 = Quantity of 2015 * Price of 2020

Real GDP for 2015 = (217 * $4) + (259 * $4)

Real GDP for 2015 = $868 + $1036

Real GDP for 2015 = $1904

GDP deflator for 2015 = ($1470 / $1904) * 100

GDP deflator for 2015 = 77.20

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider an economy that only produces two goods: strawberries and cream. Use the table below to...
Consider an economy that only produces two goods: strawberries and cream. Use the table below to compute nominal GDP, real GDP, and the GDP deflator for each year. (Year 2014 is the base year.) Year Price of strawberries Quantity of strawberries Price of cream Quantity of cream 2014 $1.00 100 $3.00 200 2015 $2.00 125 $3.50 400 2016 $3.00 150 $4.00 500 Year Nominal GDP Real GDP GDP deflator 2014    $    $     2015    $    $     2016    $    $...
Consider a simple economy that produces two goods: pens and erasers. The following table shows the...
Consider a simple economy that produces two goods: pens and erasers. The following table shows the prices and quantities of the goods over a three-year period. Year Pens Erasers Price Quantity Price Quantity (Dollars per pen) (Number of pens) (Dollars per eraser) (Number of erasers) 2013 1 110 2 185 2014 2 155 4 200 2015 3 110 4 165 Use the information from the preceding table to fill in the following table. Year Nominal GDP Real GDP GDP Deflator...
A closed economy produces and consumes 100 apples at $1 each and 100 bananas at $1...
A closed economy produces and consumes 100 apples at $1 each and 100 bananas at $1 each. Then hot weather causes production of apples to halve, price of apples to double, production of bananas to double, price of bananas to halve. Calculate the percentage changes in: nominal GDP; real GDP; GDP deflator; CPI.
Please answer the following. Suppose the economy only consumes the following two goods: Year Iced Tea...
Please answer the following. Suppose the economy only consumes the following two goods: Year Iced Tea Price Iced Tea Quantity Coffee Price Coffee quantity 2010 5 6 3 10 2012 6 4 2 12 2015 4 5 5 8 What is the nominal GDP for each year? (1) Using 2010 as a base year, what is the real GDP (1) Using the GDP deflator, what is the inflation between the years? (2) What are some issues with using the GDP...
5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and muffins....
5. Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and muffins. The following table shows the prices and quantities of the goods over a three-year period. Year Cupcakes Muffins Price Quantity Price Quantity (Dollars per cupcake) (Number of cupcakes) (Dollars per muffin) (Number of muffins) 2018 1 150 2 160 2019 2 135 4 230 2020 3 110 4 165 Use the information from the preceding table to fill in the following table. Year Nominal...
Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and muffins. The...
Real versus nominal GDP Consider a simple economy that produces two goods: cupcakes and muffins. The following table shows the prices and quantities of the goods over a three-year period. Year Cupcakes Muffins Price Quantity Price Quantity (Dollars per cupcake) (Number of cupcakes) (Dollars per muffin) (Number of muffins) 2012 1 120 1 195 2013 2 130 4 195 2014 4 130 4 145 Use the information from the preceding table to fill in the following table. Year Nominal GDP...
Suppose that the typical consumer in the economy consumed only 50 apples and 100 hamburgers in...
Suppose that the typical consumer in the economy consumed only 50 apples and 100 hamburgers in the year 2010. Below you will find information on the market prices for these goods for the years 2010 to 2015: Market Price ($ per unit) Year Apples Hamburgers 2010 0.3 0.8 2011 0.4 0.8 2012 0.4 1.0 2013 0.6 1.1 2014 0.6 1.1 2015 0.7 1.5      Use this information to answer the following questions: a) Compute the cost of living (cost of...
5. Real versus nominal GDP Consider a simple economy that produces two goods: pens and erasers....
5. Real versus nominal GDP Consider a simple economy that produces two goods: pens and erasers. The following table shows the prices and quantities of the goods over a three-year period. Year Pens Erasers Price Quantity Price Quantity (Dollars per pen) (Number of pens) (Dollars per eraser) (Number of erasers) 2018 1 150 2 160 2019 2 135 4 230 2020 3 110 4 165 Use the information from the preceding table to fill in the following table. Year Nominal...
Suppose an economy produces two goods: Apple and Banana. Calculate Nominal GDP and Real GDP by...
Suppose an economy produces two goods: Apple and Banana. Calculate Nominal GDP and Real GDP by taking 2015 as a base year. Prices and Quantities Year Price of Apple Quantity of Apple Price of Banana Quantity of Banana 2015 $2 100 $3 50 2016 $3 150 $4 100 2017 $4 200 $5 150
Consider an economy that produces three goods, cameras, legal services, and books according to the following...
Consider an economy that produces three goods, cameras, legal services, and books according to the following table below. 2013 2014 Product Quantity Price Quantity Price Camera 100 $10 120 $12 Legal services 50 15 45 20 Books 200 40 210 45 a. Determine the nominal GDP in this economy in 2013 and 2014. b. Determine the real GDP in this economy in 2013 and 2014 using 2014 as base year. c. Determine the GDP deflator in this economy in 2013...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT