e202et1a - Eco 202 Hour Test 1 Name_ 1 March 2006 100...

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Eco 202 Name_______________________________ Hour Test 1 1 March 2006 100 points. Each question is worth 20 points, so allocate your time efficiently. Please write answers in ink. You may use pencil for drawing graphs. Good Luck. 1. Suppose the following table records the total output and prices for an entire economy. Suppose further that the base year in the following table is 2003. Year Price of Peanuts Quantity of Peanuts Price of Beer Bottles of Beer 2003 $ 1.00 100 $3.00 100 2004 1.20 110 4.00 90 2005 1.50 120 4.00 100 a. Calculate nominal GDP for 2003, 2004, and 2005. b. Calculate real GDP for 2003, 2004, and 2005. c. Calculate the GDP deflator for 2003, 2004, and 2005. d. Use the GDP deflator to determine the inflation rates for 2004 and 2005. e. Was the increase in nominal GDP from 2003 to 2004 mostly due to an increase in real output or an increase in prices? Increase in prices, as real output fell. f. Was the increase in nominal GDP from 2004 to 2005 mostly due to an increase in real output or an increase in prices? Increase in both prices and real output. Nominal GDP Real GDP 2003 $400.00 2003 $400.00 2004 $492.00 2004 $380.00 2005 $580.00 2005 $420.00 GDP Deflator Inflation 2003 100 2004 29.47 2004 129.47 2005 6.66
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e202et1a - Eco 202 Hour Test 1 Name_ 1 March 2006 100...

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