The attached table again shows production data for an economy that produces only
ID: 1220559 • Letter: T
Question
The attached table again shows production data for an economy that produces only waffles, orange juice, and toaster ovens. We also have consumption data; the average person in this economy buys and consumes 50 waffles, 10 units of orange juice, and 2 toaster ovens. 2010 is the base year for all calculations
Use this information to calculate nominal GDP for 2012.
Use this information to calculate the CPI for 2012.
Use this information to calculate real GDP for 2011.
Use this information to calculate the GDP deflator for 2011.
Use this information to calculate the inflation rate for 2010 - 2011 using the GDP deflator.
Use this information to calculate the cost (price paid) for the market basket in 2012.
Use this information to calculate the inflation rate using the CPI for 2010 - 2011.
Year Waffles: Waffles: Orange Juice:Orange Juice: Toaster Ovens: Toaster Ovens Pice Quantity QuantityPrice. Quantit Price 2010 1000 $1.5 20111200$1.50 2012 1500$1.70 400 420 4400 $20 $25 S30 $4 ) 100 100) $6Explanation / Answer
** Nominal GDP for 2012:
Waffles 1500 x $1.70 + Orange Juice 440 x $6 + Toaster Ovens 100 x $30
Nominal GDP for 2012 = $2550 + $2640 + $3000
Nominal GDP for 2012 = $8,190
Nominal GDP of 2010: (Need for further calculations)
Nominal GDP = 1000 x 1.5 + 400 x 4 + 80 x 20
Nominal GDP for 2010 = $4,700
** CPI for 2012:
GDP for 2012 / GDP for 2010 x 100 = 8190 / 4700 x 100
CPI for 2012 = 174.25
** Real GDP for 2011 using 2010 constant prices and current quantities:
Real GDP for 2011 = 1200*$1.50 + 420*$4 + 100*20
Real GDP for 2011 = 1800 + 1680 + 2000
Real GDP for 2011 = $5,480
** GDP deflator for 2011:
GDP deflator formula: Nominal GDP / Real GDP x 100
Real GDP for 2011 = $5,480
Nominal GDP for 2011 = 1200*$1.50 + 420*$5 + 100*$25
Nominal GDP for 2011= 1800 + 2100 + 2500 = $6,400
GDP deflator for 2011 = 6400 / 5480 x 100
GDP deflator for 2011 = 116.78
** Inflation rate for 2010-2011 using GDP deflator:
Inflation rate for 2010-2011 = GDP deflator for 2011 / GDP deflator for 2010 x 100
(GDP deflator for base year 2010 is 100)
Inflation rate for 2010-2011 = (116.78-100) / 100 x 100 = 16.78 / 100 x 100
Inflation rate for 2010-2011 = 16.78%
** Cost (price paid) for the market basket in 2012:
Cost for the market basket in 2012 = 1500*$1.50 + 400*$4 + 100*$20
Cost for the market basket in 2012 = 2250 + 1600 + 2000
Cost (price paid) for the market basket in 2012 = $5,850
** Inflation rate using the CPI for 2010-2011
Nominal GDP for 2011= 1800 + 2100 + 2500 = $6,400
Nominal GDP for 2010 = 1500 + 1600 = 1600 = $4,700
CPI for 2010-2011 = 6400 / 4700 x 100
CPI for 2010-2011 = 136.11.
*****
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.