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**Unformatted text preview: **Page 1 of 2 THE UNIVERSITY OF TORONTO AT SCARBOROUGH Division of Management ECM B06H – Macroeconomic Theory and Policy: A Mathematical Approach TUTORIAL #1 Q1. Exhibit: Quantity Consumed and Price of Good Base Year Later Year Price of Good A 100 200 Quantity of Good A 100 200 Price of Good B 100 100 Quantity of Good B 100 100 In the exhibit, the citizens of country XYZ come to desire more of good A. As a result the quantity and price of the good both rise. a) Compute nominal GDP in the base year and the later year. b) Compute real GDP in the base and later years (in base-year prices). c) Compute the GDP deflator in the later year, using your answers to parts a and b. d) Compute the Consumer Price Index (CPI) the fixed-weight price index for the later year, using the base-year quantities as weights. Q2. Suppose that a closed economy is described by the following set of equations (Note: Subscripts that read “BAR” refer to fixed values of variables): Y = Y BAR = F(K BAR ,L BAR ) = 2,400...

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