Econ201assn3

# Econ201assn3 - 2009 was 112 and real GDP in 2009 was \$11...

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Darrin Wright Due: October 21, 2011 Econ201 3. The people of Coral Island buy only juice and cloth. The CPI market basket contains the quantities bought in 2009. The average household spent \$60 on juice and \$30 on cloth in 2009 when the price of juice was \$2 a bottle and the price of cloth was \$5 a yard. In the current year, 2010, juice was \$4 a bottle and cloth is \$6 a yard, Calculate the CPI and the inflation rate in 2010. Item Quanity Price CPI Basket Juice 30 \$4each \$120 Cloth 6 \$6each \$36 Cost of CPI market basket at current period prices \$156 CPI in 2010 = \$156/\$90 x 100 = 173.3 Inflation rate = (173.3-100/100) x 100 = 73.3% The base year is 2005. Real GDP in 2005 was \$10 trillion (2005 dollars). The GDP price index in
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Unformatted text preview: 2009 was 112, and real GDP in 2009 was \$11 trillion (2005 dollars). 5. Calculate the nominal GPD in 2005 and in 2009 and the percentage increase in nominal GPD from 2005 to 2009. 2005 nominal GDP= 10 x 1.00= \$10 trillion. 2009 nominal GDP = 11 x 1.12= \$12.32 trillion. The percentage increase= (12.32-10)/10 x 100=23.2%. 10. In 1988, the average wage rate was \$9.45 an hour and in 2008 the average wage rate was \$18.00 an hour. The CPI in 1988 was 118.3 and in 2008 it was 215.3. Which real wage rate is higher? Real Wage in 1988 = 9.45/118.3 x 100 = 7.98 Real Wage in 2008 = 18/215.3 = 8.36 2008 Has the higher real wage rate....
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## This note was uploaded on 11/14/2011 for the course ECON 201 taught by Professor Chen during the Fall '11 term at N.C. A&T.

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