(5 marks) Suppose that a very simple economy produces three goods:    pasta, tomatoes and cheese. Suppose the quantities produced and their       corresponding prices for 2015 and 2016 are shown in the following table:

                                              2015               2016

Product           Quantity         Price               Quantity         Price

Pasta             20                  $3.00             60                  $4.00

Tomatoes       50                  $6.00             20                  $10.00

Cheese           250                $12.00            300                 $10.00

(i) What is nominal GDP in 2015?

 

(ii) What is nominal GDP in 2016?

 

(iii) What is real GDP in 2015, using 2016 as the base year?

 

(iv) What has been the percentage change in nominal GDP between 2015 and 2016?

 

(v) What has been the percentage change in real GDP between 2015 and 2016, using 2016 as the base year?

 

(vi) Calculate the GDP deflator in 2015 and 2016 using 2016 as the base year.

 

(b) (5 marks) Consider the data below for the labour market of a hypothetical economy:

Labour Force Survey Categories

Persons

Working age population

60000

Not in the labour force

30000

Discouraged workers

1000

Persons not employed

32000

Do not want to work

14000

(i) Calculate the unemployment rate.

 

(ii) Calculate the labour force participation rate.

 

(c) (5 marks) Suppose an economy has only three goods, and the typical family purchases the amounts given in the following table. Furthermore, these three good are included in the basket of goods used to calculate the Consumer Price Index (CPI). Assume that the base year chosen for the CPI is 2014.

 

product quantity(2014) . price(2014) expenditures(2014) . price (2015) price(2016)

 computers . 2 $2000 $4000 $2500 $1900

books 20 $50 $1000 $60 $70

 burgers 100 $2 $200 $5 $4

total $5200 .

 

(i) What is the value of the CPI in 2014?

 

(ii) What is the value of the CPI in 2015?

 

(iii) What is the value of the CPI in 2016?

 

(iv) What is the annual inflation rate in 2015?

 

(v) What is the annual inflation rate in 2016?

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Status NEW Posted 17 May 2017 04:05 AM My Price 20.00

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