I am trying to verify my answers to my homework. Please give a brief explanation

Question

I am trying to verify my answers to my homework. Please give a brief explanation on why you chose your answer. Thanks :-)

Multiple Choice (3 pts each)
Identify the choice that best completes the statement or answers the question.

Table 23-4

The table below contains data for the country of Dachsland, which produces only pretzels and books. The base year is 2005.

Year Price Quantity Price Quantity
of of of of
Pretzels Pretzels Books Books

2005 $4.00 90 $1.50 150
2006 $4.00 100 $2.00 180
2007 $5.00 120 $2.50 200
2008 $6.00 150 $3.50 200


____ 15. Refer to Table 23-4. In 2007, Dachsland’s
a. nominal GDP was $585, real GDP was $780, and the GDP deflator was 75.
b. nominal GDP was $585, real GDP was $825, and the GDP deflator was 70.9.
c. nominal GDP was $1100, real GDP was $780, and the GDP deflator was 141.0.
d. nominal GDP was $1100, real GDP was $825, and the GDP deflator was 133.3.


Table 23-5

The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2006.

Year Price Quantity Price Quantity
of of of of
Waffles Waffles Pancakes Pancakes

2005 $2 100 $1 100
2006 $2 120 $2 150
2007 $3 150 $3 200
2008 $4 180 $3 220


____ 16. Refer to Table 23-5. In 2006, Batterland’s nominal GDP was
a. $100.
b. $390.
c. $400.
d. $540.


Table 24-3

The table below pertains to Studious, an economy in which the typical consumer’s basket consists of 5 books and 10 calculators.

Year Price of a Book Price of a Calculator
2006 $24 $8
2007 $30 $12
2008 $32 $15


____ 17. Refer to Table 24-3. The cost of the basket
a. increased by $10 from 2006 to 2007.
b. increased by $42 from 2006 to 2007.
c. increased by $70 from 2006 to 2007.
d. increased by $150 from 2006 to 2007.


____ 18. Refer to Table 24-3. If 2008 is the base year, then the consumer price index was
a. 64.5 in 2006, 87.1 in 2007, and 100 in 2008.
b. 64.5 in 2006, 270 in 2007, and 310 in 2008.
c. 200 in 2006, 87.1 in 2007, and 100 in 2008.
d. 200 in 2006, 270 in 2007, and 310 in 2008.

Explanation / Answer

Problem on table 23-4 :(15) from table 23-4, nominal GDP in 2007 = $5.00 * 120 + $2.50 * 200 = $1100 GDP deflator = (nominal GDP/real GDP)*100 => nominal GDP = GDP deflator * real GDP / 100 => 1100 = 133.3*825/100 (from option (d)) Hence, ANSWER is option (d) Problem on table 23-5 :(16) nominal GDP in 2006 = $2* 120 +$2 *150 = $540 Problem on table 24-3 :(17) cost of a basket in 2006 = $24 + $8 = $32 cost of a basket in 2007 = $30 + $12 = $42 increase in cost of a basket in 2007 over 2006 = $42 - $32 = $10 Hence, ANSWER is option (a) Problem on table 24-3 :(18) basket price in 2008 = $32 + $15 = $47 CPI in 2006 = 32/47*100 = 68.1 CPI in 2007 = 42/47*100 = 89.4 CPI in 2008 = 47/47*100 = 100 Hence, option (a) is the nearest best and is the ANSWER.

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