Compute a consumer price index for apples for each year

Assignment Help Econometrics

Reference no: EM13207287

Abby consumes only apples. In year 1, red apples cost $1 each, green apples cost $2 each, and Abby buys only 10 red apples. In year 2, red apples cost $2, green apple costs $1, and Abby buys only 10 green apples.

a. Compute a consumer price index for apples for each year. Assume that year 1 is the base year in which the consumer bsaket is fixed. How does your index change from year 1 to year 2?

b. Compute Abby's nominal spending (Hint: use the same idea to calculate nominal GDP). How does it change from year 1 to year 2?

c. Using year 1 as the base year, Abby's real spending (Hint: use the same idea to calculate real GDP) on apples in each year. How does it change from year 1 to year 2?

d. Defining the deflator as nominal spending divided by real spending, compute the deflator for each year. How does the deflator change from year 1 to year 2? Compare this answer to part ‘a'.

Reference no: EM13207287

Questions Cloud

Explain what is the final pressure in the flask : In a closed 1.00 L flask, 2.60 atm of CO reacts with 5.80 atm of O2 according to the equation below. Assuming that the temperature remains constant, what is the final pressure in the flask?

How and why the firms demand curve for labor will compare : Consider a firm with the same production function of $20 output price when 2 units of output are produced but operating under imperfect competition in the product market. Explain how and why the firms demand curve for labor will compare to that of..

How often do you look at a clock or watch during the day : How often do you look at a clock or watch during the day? Is there anything unnatural about being governed by clocks or watches? What would happen to modern society if all the timepieces stopped, never to run again?

State what is the volume of nitrogen at stp : Using the dumas method, you find that a sample weighing 71.6mg gives 3.84mL of nitrogen gas at 23 deg.celcius and 785 mmHg. What is the volume of nitrogen at STP?

Compute a consumer price index for apples for each year : Abby consumes only apples. In year 1, red apples cost $1 each, green apples cost $2 each, and Abby buys only 10 red apples. In year 2, red apples cost $2, green apple costs $1, and Abby buys only 10 green apples. a. Compute a consumer price index ..

What does the artist represent in the piece : What does the artist represent in the piece? What story is he/she trying to tell? If the piece is a painting, which genre does it come from

Explain the molar mass of a volatile liquid : Briefly explain why it was not necessary for you to determine the mass of unknown liquid that you transferred to the flask before heating.

How much are the trademark licensing rights worth : When the colts won the super bowl the demand for peyton manning's jersey was: P = 210 - 0.002Q with a corresponding marginal revenue of: MR = 210 - 0.0004Q IF the marginal cost of producing a jersey is $10, how much are the trademark licensing rig..

User Account

All Pages