By what percentage does real gdp change

Reference no: EM132200827

Question: Need (E-K) answered using the answers given for A-D. answers A through D are underneath each letter in bold letters. I know you are only supposed to do 4 parts and this one E-K is 7 parts but it would be so useful if you could complete them.
2. An economy produces three goods: cars, computers, for years 2009 and 2010 are given as follows:

2009 Quantitity-- cars -10.. Computers-4.. Oranges-1000..

2009 Prices-- cars- $2000.. Computers- $1000.. Oranges- $1..

2010 Quantitity-- cars- 12.. Computers- 6.. Oranges- 1000..

2010 Price -- Cars- $3000 Computers- $500 Oranges - $1

(a) What is nominal GDP in 2009 and in 2010? By from 2009 to 2010? By what percentage does nominal GDp change from 2009 to 2010?

- Nominal GDP 2009- $25,000/ Real GDP 2010- $40,000. % Change = 60%

(b) Using the prices for 2009 as the set of common prices, what is real GDP in 2009 and in 2010? By what percentage does real GDP change from 2009 to 2010?

-Real GDP 2009- $25,000/ Real GDP 2010- $31,000. % Change = 24%

(c) Using the prices for 2010 as the set of common prices, what is real GDP in 2009 and in 2010? By what percentage does real GDP change from 2009 to 2010?

-Real GDP 2009- $33,000/ Real GDP 2010- $40,000. % Change = 21.21%

(d) Why are the two output growth rates constructed in (b) and (c) different? Which one is correct? Explain your answer.

- The answers constructed in (B) and (C) are different because they measure RGDP in different units. Neither answer is incorrect.

(e) Using the real GDP values you have calculated in part b, compute the GDP deflator for 2009 and for 2010, and compute the rate of inflation from 2009 to 2010.

(f) Using the real GDP values you have calculated in part c, compute the GDP deflator for 2009 and for 2010, and compute the rate of inflation from 2009 to 2010.

(g) Why are the two rates of inflation different? Which one is correct? Explain your answer.

(h) Construct real GDP for years 2009 and 2010 by using the average price of each good over the two years.

(i) By what percentage does real GDP change from 2009 to 2010?

(j) What is the GDP deflator in 2009 and 2010? Using the GDP deflator, what is the rate of inflation from 2009 to 2010?

(k) Is this an attractive solution to the problems pointed out in part d and g (i.e., two different growth rates and two different inflation rates, depending on which set of prices is used)?

Reference no: EM132200827

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