Log in
Economics
1
answer
0
watching
204
views
27 Aug 2018

Nominal income for a typical
family of 4 in the U.S.		 RGDP
per capita		 GDP Deflator
(2000=100)

CPI-All items, All
urban consumers
(1982-84)=100
1990 $41, 451 $28,448 81.59 134.2
2000 $62, 228 $34,774 100 174.6

a. Calculate the growth rate in GDP per capita between 1990 and 2000.

b. Calculate the average annual growth rate in the real income of a typical family of four in the U.S. over a period 1990-2000.

c. Calculate the annual inflation rate in the GDP deflator and the CPI.

Watch
1
answer
0
watching
204
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Sixta Kovacek
Sixta KovacekLv2
28 Aug 2018

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

In recent years, the BRIC (Brazil, Russia, India and China) countries have received much attention due to their growing importance in the world economy. Now that you are equipped with knowledge about macroeconomic data, you can take a first-hand look at how quickly these countries have been growing, how much inflation they have, and how developed they are when compared to the USA.

Brazil

Russia

India

China

USA

Nominal GDP in 2013 (local currency, Million)

4,844,815

66,755,300

113,550,735

56,884,521

16,768,100

Nominal GDP in 2000 (local currency, Million)

1,179,482

7,305,600

21,774,127

9,921,455

10,284,800

Price Level in 2013 (index 2010=100)

124.12

121.63

132

111.1

106.8

Price Level in 2000 (index 2010=100)

51.4

30.75

54.2

81

79

Population in 2013 (in Million)

200.4

143.5

1,252

1,357

316.1

Population in 2000 (in Million)

174.5

146.6

1,042

1,263

282.2

Dollar/Local Currency Exchange rate 2013

1/2.4

1/32.6

1/62.18

1/6.07

1

PPP Conversion Factor 2013

1/1.9

1/19.47

1/18.24

1/3.36

1

The PPP conversion factor is the price in US dollars of a basket of goods (chosen by the World Bank) in the USA divided by the price in local currency of a comparable basket in that country.

For each of the BRIC countries and the US, over the period 2000-2013, answer the following:

1.What was the average annual inflation rate?

2.What was the average annual growth rate of population?

3.What was the average annual growth rate of real GDP?

4.What was the average annual growth rate of real GDP per capita?

5.For each of the BRIC countries, in the year 2013, how did real income per capita compare to that in the US? (To make this comparison, report real GDP per capita for each country as a percentage of the US.) Report two answers, one based on market exchange rates and one adjusted for differences in purchasing power.

1) Assume there is a simple economy where people consume only 2 goods, food, and clothing. Further, assume that the market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing.

 

Food

Clothing

2004 price per unit

$8

$20

2005 price per unit

$12

$40

Compute the percentage changes in the price of food and the percentage change in the price of clothing between 2004 and 2005.

Calculate the percentage change in the CPI between 2004 and 2005.

Do you think the CPI price changes affect all consumers in the economy to the same extent? Explain.

2) Calculate how much each of the following items is worth in terms of today's dollars using 180 as the price index for today.

a. In 1925, the CPI was 18 and the price of a movie ticket was $0.30.

b. In 1930, the CPI was 14 and a cook earned $20 a week.

c. In 1940, the CPI was 16 and a gallon of gas cost $0.20.

3) The table below uses data for 3 hypothetical countries. All the number values are in thousands. Complete the blank entries in the table below.

Country

Adult

Population

Labor

Force

Employed

Unemployed

Unemployment

Rate

Labor-Force

Participation

Rate

A

120,000

  

60,000

4,500

    

B

  

28,000

  

3,000

  

60

C

70,000

40,000

    

10

  

4) The following table indicates U.S. real GDP data. Calculate real GDP per person for 1987 and 2005. Then use real GDP per capita to compute the percentage change in real GDP per person from 1987 to 2005.

Year

Real GDP (2000 prices)

(in million)

Population

(in million)

1987

$6,435,000

243

2005

$11,092,000

296.6

The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year.

Year

Consumer Price Index

Inflation Rate

2005

100

2006

115

B

2007

125

C

2008

140

D

2009

A

10%

2010

160

E

8.7%

120

25%

12%

The price index was 170 in the first year, 180 in the second year, and 195 in the third year. The inflation rate was about

5.9 percent between the first and second years, and 8.3 percent between the second and third years.

5.6 percent between the first and second years, and 7.7 percent between the second and third years.

10 percent between the first and second years, and 15 percent between the second and third years.

80 percent between the first and second years, and 95 percent between the second and third years.

0.1 points

QUESTION 17

The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced

5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years.

7.5 percent deflation between the first and second years, and 4.3 percent deflation between the second and third years.

5.3 percent inflation between the first and second years, and 4.1 percent inflation between the second and third years.

7.5 percent inflation between the first and second years, and 4.3 percent inflation between the second and third years

0.1 points

QUESTION 18

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

The real interest rate is the nominal interest rate minus the rate of inflation.

The real interest rate is the nominal interest rate times the rate of inflation.

The real interest rate is the nominal interest rate plus the rate of inflation.

The real interest rate is the nominal interest rate divided by the rate of inflation.

0.1 points

QUESTION 19

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

4 percent.

-4 percent.

3 percent.

8 percent.

0.1 points

QUESTION 20

If the nominal interest rate is 7 percent and the real interest rate is -2.5 percent, then the inflation rate is

9.5 percent.

4.5 percent.

-4.5 percent.

-9.5 percent.

. From 2009 to 2010, the CPI for education increased from 279.3 to 281.8. What was the inflation rate for education between 2009 and 2010?

0.9%

9.0%

2.5%

90%

If the consumer price index changes from 125 in September to 150 in October, what is the rate of inflation?

20.0%

45.5%

16.7%

9.1%

. Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year. In 2013, the basket’s cost was $80; in 2014, the basket’s cost was $86; and in 2015, the basket’s cost was $90. The value of the CPI in 2015 was

104.6 and the inflation rate was 4.6%.

112.5 and the inflation rate was 4.6%.

112.5 and the inflation rate was 12.5%.

104.6 and the inflation rate was 12.5%.

Suppose a basket of goods and services has been selected to calculate the CPI. In 2002, the basket’s cost was $80; in 2008, the basket’s cost was $92; and in 2010, the basket’s cost was $108. The base year must be

The base year cannot be determined from the given information.

2002

2008

one of the years between 2008 and 2010.

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket’s cost was $80.00; in 2013, the basket’s cost was $84; and in 2014, the basket’s cost was $87.60. The value of the CPI was

All of the above are correct.

109.5 in 2014.

105 in 2013.

100 in 2012.

Which of the following is correct?

The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.

The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers.

The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers.

The GDP deflator is more commonly used as a gauge of inflation than the CPI is.

The inflation rate is defined as the

percentage change in the price level from the previous period.

price level in an economy.

change in the price level from one period to the next.

price level minus the price level from the previous period.

Economists use the term inflation to describe a situation in which

the economy's overall price level is rising.

some prices are rising faster than others.

the economy's overall price level is high, but not necessarily rising.

the economy's overall output of goods and services is rising faster than the economy's overall price level.

Related Documents

ECO 1102
Final Exam
Study Guide
ECO 1102 Study Guide - Midterm Guide: Economic Equilibrium, Financial Capital, Starbucks
blushherring320
ECO102H1 Lecture 27: Lecture 27-Macroeconomics Overview
copperclam445
ECO102H1 Lecture Notes - Lecture 14: Gdp Deflator, Simple Algebra, Fixed Investment
chocolatezebra335

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in