Question

The information in the table identifies the quantities of three goods produced in a simple economy in 2018 and 2019, and the prices that the goods sold for in each of the two years. The base year is 2018. Item Quantity Price Price Quantity 2018 2018 2019 2019 $10 $11.55 Movie tickets 2 $3 $3.12 Bags of popcorn 16 $1 $1.48 16 Drinks of soda Based on the GDP deflator method, what was the rate of inflation between the two years? Round your answer to two decimal places. Do not enter a percent sign

Answer 1

Answer 1

Item Quantity Price Price Quantity 2018 (Q1) 2018 (P1) 2019 (P2) 2019 (Q2) P1*Q1 P1*Q2 P2*Q2 2 10 11.55 4 0 40 46.2 Movie Tickets Bags of Popcorn Drinks of soda 2 3 3.12 6 6 18 18.72 6 1 1.48 6 6 6 8.88 Total 12 64 73.8

The Real GDP and Nominal GDP will be the same for year 2018 as it is the base year.

The real GDP and Nominal GDP for year 2018 is $12.

GDP Deflator for year 2018 is:

$Deflator=\frac{Nominal GDP}{Real GDP}\times 100$

$Deflator=\frac{12}{12}\times 100=100$

The real GDP for 2019 is $64 and the nominal GDP is $73.80.

GDP Deflator for year 2019 is:

$Deflator=\frac{73.8}{64}\times 100=115.31$

The rate of inflation between 2018 and 2019 is:

$Inflation=\frac{GDP 2019-GDP 2018}{GDP 2018}$

$Inflation=\frac{115.31-100}{100}=0.15$

Answer 2

The fluctions in the growth rate of GDp across times are known as business cycles.

Answer 3

The GDP increases by $19,000.

The value added by Bob is $6,000.

The value added by Jim is $6,000 (12000-6000).

The value added by Publix is $7,000 (19,000-12,000).

Answer 4

Explicit cost

Explicit cost

Implicit cost

Explicit cost