Reference no: EM132206631
Question: 1. Consider an economy with three productive sectors: farming; manufacturing; and retailing. Manufacturers produce goods each year with a sale value of $500. They sell $300 to retailers, $50 direct to Canadians and $150 direct to government for consumption. Retailers buy goods for $300 from manufacturers and buy $50 from agricultural sector. Retailers sell goods to consumption for $500. Manufacturers buy goods worth $200 from agricultural firms. Farmers sell $100 direct to the private sector for consumption. What is the value added in each sector? What is the consumption, investment, government spending and net exports? What is the total output for the economy?
2. Consider the following data on US GDP.
|
Year
|
Nominal GDP (in billions)
|
GDP deflator (base year 2005)
|
|
2010
|
14755
|
110.66
|
|
2009
|
14087
|
109.10
|
a. What was the growth rate of nominal GDP between 2009 and 2010?
b. What was the inflation rate between 2009 and 2010?
c. What was the real GDP in 2009 measured in 2005 prices?
d. What was the real GDP in 2010 measured in 2005 prices?
e. What was the growth rate of real GDP between 2009 and 2010?
3. Assume that in United States are sold only the products below:
|
Goods
|
Quantity 2015
|
Price 2015
|
Quantity 2016
|
Price 2016
|
|
Milk
|
300
|
4
|
350
|
5
|
|
Oranges
|
200
|
1.50
|
250
|
1
|
|
Movie tickets
|
80
|
9
|
90
|
10
|
|
Electric saw for business
|
5
|
60
|
8
|
70
|
|
Chocolate from Switzerland
|
150
|
5
|
140
|
7
|
a. Using 2015 as base year, find the nominal GDP, real GDP in both years, and the real GDP growth rate between two years.
b. Find the inflation rate using GDP deflator and CPI. Explain the reason why there might be a difference between two inflation rates.