Textbook_Solutions_chpt2

# B 1st stage 300000 2nd stage 100000 300000700000 gdp

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

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: tage: \$300,000. 2nd Stage: \$1,000,00-\$300,000=\$700,000. GDP: \$300,000+\$700,000=\$1,000,000. c. 4. No change. This transaction is a purchase of intermediate goods. b. 3. a. Wages: \$200,000 + \$250,000=\$450,000. Profit: (\$300,000-\$200,000)+(\$1,000,000-\$250,000-300,000) =\$100,000+\$450,000=\$550,000. GDP: \$450,000+\$550,000=\$1,000,000. a. 2005 GDP: 10(\$2,000)+4(\$1,000)+1000(\$1)=\$25,000 2006 GDP: 12(\$3,000)+6(\$500)+1000(\$1)=\$40,000 Nominal GDP has increased by 60%. b. 2005 real (2005) GDP: \$25,000 2006 real (2005) GDP: 12(\$2,000)+6(\$1,000)+1000(\$1)=\$31,000 Real (2006) GDP has increased by 24%. c. d. 2005 base year: Deflator(2005)=1; Deflator(2006)=\$40,000/\$31,000=1.29 Inflation=29% 2006 base year: Deflator(2005)=\$25,000/\$33,000=0.76; Deflator(2006)=1 Inflation=(1-0.76)/0.76=.32=32% Analogous to 4d. a. 2005 real GDP = 10(\$2,500) + 4(\$750) + 1000(\$1) = \$29,000 2006 real GDP = 12(\$2,500) + 6(\$750) + 1000(\$1) = \$35,500 b. (35,500-29,000)/29,000 = .2...
View Full Document

## This note was uploaded on 01/29/2014 for the course ECON 110A taught by Professor Staff during the Winter '08 term at UCSD.

Ask a homework question - tutors are online