he graph shows an aggregate demand curve. raw a curve that shows the effect on aggregate demand fan increase in the expected future inflation rate. Label 140- 130- 120- 110- 100- 90- Price level (GDP deflator, 2009-100) AD
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- Suppose the Federal Reserve begins to Increase the supply of money at an Increasing rate. What Impact would that have on GDP, unemployment, and inflation?Consider a simple economy that produces only three goods. Assume that all goods produced are consumed in same period (no inventories). Following table provides information on price and quantity produced and consumed of each of three goods: 2021 2021 2022 2022 Price Quantity Price Quantity Good 1 25 25 40 33 Good 2 45 45 60 35 Good 3 80 50 90 45 Calculate nominal and real GDP for both years using 2021 as the base year. Then calculate inflation rate derived from the GDP deflator and real GDP growth between 2021 and 2022. Calculate Consumer Price Index (CPI) for each year using share of consumption of each product in 2021 as a weight. Then find CPI inflation rate between 2021 and 2022. Is this inflation rate different from GDP deflator inflation rate? Discuss reasons for differences, if any. True, false or uncertain? Above results show that GDP deflator is worse than CPI for measuring changes in average prices in economy. CommentBecause there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. The GDP deflator for this year is calculated by dividing the value of all goods and services produced in the economy this year using_________ by the___________using___________and multiplying by 100. However, the CPI reflects only the prices of all goods and services____________.
- The following table gives nominal and real GDP for an economy for two years. Based on the table, in Year 2, the value of the GDP deflator is Year 1 1430.0 1,300 Nominal GDP Real GDP (Round your answer to one decimal place.) The inflation rate between Year 1 and Year 2 is %. (Round your answer to one decimal place.) Year 2 1820.0 1560.0Table 5-2 Price of Magazines Quantity of Magazines 180 200 200 $2.00 $2.50 $3.50 Year Price of Burgers Quantity of Burgers 2017 $4.00 100 2018 $5.00 120 2019 $6.00 150 Refer to Table 5-2. Using the GDP deflator to measure the average level of prices and using 2017 as the base year, what is the economy's inflation rate? O a. 20 percent for 2018 and 30 percent for 2019 O b. 44.7 percent for 2018 and 45.5 percent for 2019 O c.25 percent for 2018 and 28 percent for 2019 O d. 20 percent for 2018 and 12.5 percent for 2019 6489a31#The nominal GDP for 2021 is $125 billion, and the real GDP for 2021 is $100 billion. (1). Calculate the GDP Deflator in 2021? Show your calculation. (2). Also assume that the GDP deflator in 2020 was 100. What is the inflation rate over the 1-year period? Show yourcalculation.
- Good P Beer Pizza $8 $11 10.00% 16.406% 0% The table above shows the prices and quantities of Beer and Pizza in an economy in both 2021 and 2022. You also know that the GDP Deflator in 2022 is 100. Given this information, the inflation rate between 2021 and 2022 must be: 2021 Q 75 120 16.377% P $9 $13 2022 Q 80 125Those are the production numbers for 3 different years for country B (50pts) Year Price of Bananas $ Quantity of bananas kg. Price of backrubs $ Quantity of backrubs 1 1.00 5 6.00 5 2 1.00 5 6.00 7 3 2.00 10 6.00 9 Calculate real and nominal GDP for year 1, 2 and year 3 when base year is year 1. Compute inflation in country B from period 1 to period 2. Compute inflation rate from period 1 to 3 Compute inflation rate from period 2 to 3 Calculate GDP with Chain weighted method for period 3. Compare the result with the answer in part a.estion 6 Real GDP is best described as: A measure of a nation's output and employment holding wages constant. A measure of a nation's output at the current level of prices. A measure of a nation's prices holding output constant. 0 0.0 о A measure of a nation's output holding prices constant. A measure of a nation's prices at the current level of output. L Moving to the next question prevents changes to this answer. .:: JUL 19 tv 10 2
- Suppose an economy consumes only two goods: food and entertainment. The following table shows quantities consumed and prices for three years: Year 0 (the base year), Year 1, and Year 2. QUESTION; compute inflation rates (from year 0 to year 1 and from year 1 to year 2) based on GDP deflator Item Year 0 Year 1 Year 2 Quantity (units) Price ($ / unit) Quantity (units) Price ($ / unit) Quantity (units) Price ($ / unit) Food 50 5 75 6 80 4 Entertainment 100 12 110 11 115 14You are provided the following data regarding an imaginary country. 2019 2020 Commodities Price Quantity Price Quantity A 3 30 25 4 20 5 30 C 20 18 25 25 a) Using the data given above, compute the Nominal and Real GDP for 2019, and 2020. (The base year is 2019) b) Compute the inflation rate for the year 2020 by using the GDP deflator.Does the index calculated from the prices and quantities in this table over or understate the inflation in the economy? Why? 2017 2018 2 pairs of jeans $15.00 each 1 pair of jeans $20.00 each 2 movies $7.50 each 1 movie $10.00 each 1 pizza $5.00 each 3 pizzas $5.00 each