Use the following to answer question 10: Table 10 ealehelw roports nominal and r

Question

Use the following to answer question 10: Table 10 ealehelw roports nominal and real GDP for the U.S. from 1929 to 1932. Nominal Real GDP GDP 977 91.2 892.8 76.5 834.9 58.7 725.8 Year 1929 1930 931 1932 103.6 efer to Table 10-3. What is the GDP deflator for 1931 and the inflation rate for the period 1930-1931? A) The GDP deflator is 9.16, and the inflation rate is-11.5% B) "The GDP deflator is 916, and the inflation rate is-10.3% d) The GDP deflator is 1091.37, and the inflation rate is 10.3% D) The GDP deflator is 1091.37, and the inflation rate is 11.5% When a currency becomes more valuable in terms of other currencies, we say that it: A) has appreciated. B) is no longer in equilibrium. 11. C) has depreciated. D) is overvalued. 12. Which would be included in the U.S. financial account? A) computer made in the United States and exported to Britain B) computer made in Britain and imported into the United States C) interest on a U.S.company's bond sold to someone living overseas D) the value of a bond from a company in the United States sold to someone living in Britain Use the following to answer question 13: Scenario: Assets and Liabilities of the Banking System Assets Loans Liabilities Deposits$1,000,000 $900,000 Reserves100,000

Explanation / Answer

10.

The formula for GDP deflator is

GDP Deflator = (Nominal GDP / Real GDP) * 100

GDP deflator for 1931 = (76.5 / 834.9) * 100 = 9.16

Now, to calculate the inflation rate for 1930 - 31, we need to calculate the GDP deflator for 1930.

GDP deflator for 1930 = (91.2 / 892.8) * 100 = 10.22

Now, the inflation rate for 1930-31 = [(9.16 - 10.22) / 10.22] * 100 = - 10.3%

So, the correct option is:

B) The GDP Deflator is 9.16 and the inflation rate is - 10.3%.

11.

When a currency becomes more valueable in terms of other currencies, we say that is:

A) has appreciated.

12.

The following would be included in the U.S. financial account:

D) the value of a bond from a company in the United States sold to someone living in Britain.

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