econ303-hw1-spring16(1) - Econ303 Homework Assignment 1...

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1 Econ303 Homework Assignment 1 Spring 2016 Due Wednesday February 10 Name: Section: 1.Suppose you are measuring annual U.S. GDP by adding up the final value of all goods and services produced in the economy. Determine the effect on GDP of each of the following transactions. a.A seafood restaurant buys $100 worth of fish from a fisherman. b.A family spends $100 on a fish dinner at a seafood restaurant. c.Delta Air Lines buys a new jet from Boeing for $200 million. d.The Greek national airline buys a new Jet from Boeing for $200 million. e.Delta Air Lines sells one of its jets to Kim Kardashian for $100 million.
2 2.Consider an economy that produces and consumes bread and automobiles. In the following tables are data for two different years 2000 2010 Good Quantity Price Quantity Price Automobiles 100 $50,000 120 $60,000 Bread 500,000 $10 400,000 a.Using 2000 as the base year, compute the following statistics for each year: nominal GDP, the implicit price deflator for GDP, and a fixed-weight price index such as the CPI. b.How much did prices rise between 2000 and 2010? Compute the answers given by the Laspeyres and Paasche price indexes. Explain the difference. $20

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