1 14. Use the following economy for the next 15 questions. Use 2009 as your base

Question

1

14. Use the following economy for the next 15 questions. Use 2009 as your base year for any calculations where a base year is needed.

2007: 4000 hamburgers, $2.00 each; 30 refrigerators, $400 each; 350 lawns mowed, $30 each

2008: 4200 hamburgers, $2.05 each; 32 refrigerators, $410 each; 350 lawns mowed, $40 each

2009: 4400 hamburgers, $2.15 each; 38 refrigerators, $420 each; 350 lawns mowed, $50 each

1. What is nominal GDP for 2007?

2. What is nominal GDP for 2008?

3. What is nominal GDP for 2009?

4. What is real GDP for 2007?

5. What is real GDP for 2008?

6. What is real GDP for 2009?

7. What is the growth rate of nominal GDP for 2008? (This means from 2007 - 2008)

8. What is the growth rate of nominal GDP for 2009? (This means from 2008 - 2009)

9. What is the growth rate of real GDP for 2008? (This means from 2007 - 2008)

10. What is the growth rate of real GDP for 2009? (This means from 2008 - 2009)

11. What is the GDP deflator for 2007? What is the GDP deflator for 2008?

12. What is the GDP deflator for 2009? What is the inflation rate for 2008? (growth rate of GDP deflator from 2007 - 2008)

13. What is the inflation rate for 2009? (growth rate of GDP deflator from 2008 - 2009)

14. What is the inflation rate for 2008? (growth rate of GDP deflator from 2007 - 2008)

15. What is the inflation rate for 2009? (growth rate of GDP deflator from 2008 - 2009)

Explanation / Answer

1) Nominal GDP (2007)= P(2007)*Q(2007)

= (4000*2)+(30*400)+(350*30)

= 8000+12000+10500

= 30500

2) Nominal GDP( 2008)= P(2008)*Q(2008)

= (4200*2.05)+(32*410)+(350*40)

= 8610+13120+14000

= 35730

3) Nomianl GDP (2009)

= p(2009)*Q(2009)

= 9460 + 15960+17500

= 42920

4) Real GDP (2007) = P(2009)*Q(2007) as 2009 is a base year

= (4000*2.15)+(30*420)+(350*50)

= 8600+12600+17500

= 38700

5) Real GDP ( 2008)= P(2009)*Q(2008)

= 9030 + 13440+ 17500

= 48440

6) Real GDP( 2009) = Nominal GDP (2009)

= 42920 as base year is 2009

11) GDP deflator (2007) = Nominal GDP(2007)/ Real GDP (2007)

= 30500/38700 *100

= 78.81%

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