Textbook_Solutions_chpt2

B 1st stage 300000 2nd stage 100000 300000700000 gdp

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

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