HW_chap_17_answers[1]

HW_chap_17_answers[1] - Econ 100 San Francisco State HW...

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Econ 100 San Francisco State HW Chapter 17 You do not need to turn this problem in to me, but you can assume that there will be problems very similar to it in either a quiz or an exam. It would greatly benefit your to do it. 1) Here is some information about an economy: 2006 2007 # of books purchased 10 11 Price of books $10.50 $9.50 # of movies purchased 5 10 Price of movies $15 $12 # of pizzas purchased 30 20 Price per pizza $18 $22 # of industrial pizza making machines purchases 2 1 Price per industrial pizza making machine $100 $150 a) Using 2006 as a base year, calculate nominal and real GDP for each year. nom GDP 2006 = 10 x $10.50 + 5 x $15 + 30 x $18 + 2 x $100 = $920 real GDP 2006 = 10 x $10.50 + 5 x $15 + 30 x $18 + 2 x $100 = $920 nom GDP 2007 = 11 x $9.50 + 10 x $12 + 20 x $22 + 1 x $150 = $814.50 real GDP 2007 = 11 x $10.50 + 10 x $15 + 20 x $18 + 1 x $100 = $725.50 b) Calculate the GDP inflator for each year: GDP deflator for 2006 = (920/920)*100 = 100 GDP deflator for 2007 = (814.50/725.50)*100 = 112 c) Using the GDP deflator, what was the change in the price level? Change in the price level = 112 100 100 × 100 = 12% increase in the price level. d) Using 2006 as a base year, calculate nominal and real consumption for each year. nom C 2006 = 10 x $10.50 + 5 x $15 + 30 x $18 = $720
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real C 2006 = 10 x $10.50 + 5 x $15 + 30 x $18 = $720 nom C 2007 = 11 x $9.50 + 10 x $12 + 20 x $22 = $664.50
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This note was uploaded on 09/08/2011 for the course ECON 100 taught by Professor Pgking during the Spring '08 term at S.F. State.

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HW_chap_17_answers[1] - Econ 100 San Francisco State HW...

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