ps2 - d. Why are the two output growth rates constructed in...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMICS 205: PRINCIPLES OF MACROECONOMICS FALL 2008 MARK MOORE PROBLEM SET 2 1 – 5. Baumol and Blinder, p. 127, Test Yourself, questions 1, 3, 4, 5, and 6. 6. An economy uses three goods: cars, computers, and oranges. Quantities and prices per unit for years 2001 and 2002 are as follows; 2001 2002 Quantity Price Quantity Price Cars 10 $2000 12 $3000 Computers 4 $1000 6 $500 Oranges 1000 $1 1000 $1 a. What is nominal GDP in 2001 and in 2002? By what percentage does nominal GDP change from 2001 to 2002? b. Using the prices for 2001 as the set of common prices, what is real GDP in 2001 and in 2002? By what percentage does real GDP change from 2001 to 2002? c. Redo part b using the prices for 2001 as the set of common prices.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: d. Why are the two output growth rates constructed in (b) and (c) different? Which one is correct? Explain your answer. 7. Use the data from problem 2 to do this problem a. Using prices in 2001 as the common set of prices to construct real GDP, compute the GDP deflator for 2001 and 2002 and the rate of inflation from 2001 to 2002. b. Redo part a using the prices for 2002 as the common set of prices. 8-10. Baumol and Blinder, p. 130-131, Test Yourself, questions 1, 4, and 5. (Note that in problem 5, you can compare your answers to the series on real hourly earnings in the back of the book. The answers wont be identical. Why?)...
View Full Document

Ask a homework question - tutors are online