Suppose that in 1994 the total output in a single-good economy was 10,000 buckets of chicken. Also suppose that in 1994 each bucket of chicken was priced at $16. Finally, assume that in 2015 the price per bucket of chicken was $20 and that 22,000 buckets were produced. Instructions: In parts a-b, enter your answer rounded to 1 decimal place. In part c, enter your answers as a whole number. a. What is the GDP price index for 1994, using 2015 as the base year? b. By what percentage did the price level, as measured by this index, rise between 1994 and 2015? percent c. What were the amounts of real GDP in 1994 and 2015? In 1994, real GDP = $ In 2015, real GDP = $
Question
Suppose that in 1994 the total output in a single-good economy was 10,000 buckets of chicken. Also suppose that in 1994 each bucket of chicken was priced at 20 and that 22,000 buckets were produced. Instructions: In parts a-b, enter your answer rounded to 1 decimal place. In part c, enter your answers as a whole number. a. What is the GDP price index for 1994, using 2015 as the base year? b. By what percentage did the price level, as measured by this index, rise between 1994 and 2015? percent c. What were the amounts of real GDP in 1994 and 2015? In 1994, real GDP =
Solution
a. The GDP price index for 1994, using 2015 as the base year, is calculated as follows:
First, we need to find the price of the bucket of chicken in 1994 in terms of 2015 prices. This is done by dividing the 1994 price by the 2015 price and then multiplying by 100 to get a percentage.
So, (16/20) * 100 = 80.0
Therefore, the GDP price index for 1994, using 2015 as the base year, is 80.0.
b. The percentage rise in the price level between 1994 and 2015 is calculated by subtracting the 1994 index from the 2015 index (which is 100, as it's the base year), dividing by the 1994 index, and then multiplying by 100 to get a percentage.
So, ((100 - 80) / 80) * 100 = 25.0 percent
Therefore, the price level, as measured by this index, rose by 25.0 percent between 1994 and 2015.
c. The real GDP is calculated by dividing the nominal GDP by the price index (in percentage form) and then multiplying by 100.
In 1994, the nominal GDP was 10,000 buckets * 160,000. So, the real GDP in 1994 was (160,000 / 80) * 100 = $200,000.
In 2015, the nominal GDP was 22,000 buckets * 440,000. So, the real GDP in 2015 was (440,000 / 100) * 100 = $440,000.
Therefore, the real GDP in 1994 was 440,000.
Similar Questions
Consider an economy that produces only good A and good B. In year 1, this economy produced 12,000 units of good A and 8,000 units of good B. In year 2, this economy produced 11,000 units of good A and 8,500 units of good B. The per unit prices in each year are given in the table below. Year 1 Year 2Good A $500 $300Good B $550 $350Assuming year 1 to be the base year, find the level of inflation using GDP deflators. Correct Answer 12.11% You Answered 9.8% 10.1% 13.7%
The formula for calculating a price index is ______.Multiple choice question.real GDP divided by nominal GDPthe price of a market basket in a specific year divided by the price of the same market basket in the base year multiplied by 100the price of the market basket in the base year divided by the price of the same market basket in a specific year multiplied by 100real GDP multiplied by nominal GDP
The "market basket" for an economy consists of two hot dogs and four hamburgers. In the base year of 2019 (CPI=1.00), the price of a hot dog was $3.00, and the price of a hamburger was $5.00.What is the CPI in 2020 if the prices of hot dogs and hamburgers are $3.25 and $5.25 respectively? Round your answer to two decimal places.
If the GDP deflator rises from 185 to 190, what is the percentage increase in the price level between the two years?Group of answer choices270%50%5%2.7%
The price of a market basket of goods in a specific year divided by the price of the same market basket of goods in the base year multiplied by 100 is called a ______.Multiple choice question.price indexreal GDPconsumption indexnominal GDP
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.