Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Assume an economy in which only broccoli and cauliflower are produced
Assume an economy in which only broccoli and cauliflower are produced. In year 1, 600 million kilograms of broccoli are produced and consumed and its price is $0.90 per kilogram, while 750 million kilograms of cauliflower are produced and consumed and its price is $0.70 per kilogram. In year 2, 800 million kilograms of broccoli are produced and consumed and its price is $0.95 per kilogram, while 650 million kilograms of cauliflower are produced and its price is $0.80 per kilogram.
Using year 1 as the base year, the GDP price deflator in year 1 is and the GDP price deflator in (Round your responses to two decimal places as needed.) year 2 is
Expert Solution
Answer:
GDP price deflator in year 1 : 100
GDP price deflator in year 2 :108.94
Explanation :
GDP deflator =(nominal GDP /real GDP) *100
Nominal GDP =current year quantity *current year price
Year 1 =(600million* $0.90)+(750 million*$0.70)
=540 million+525 million
= 1065 millions.
Year 2=(800 million *0.95)+(650 million*0.80)
=760+520
=1280.
Real gdp =current year quantity* base year prices
Year 1 =(600million* $0.90)+(750 million*$0.70)
=540 million+525 million
= 1065 millions.
Year 2 =(800million* $0.90)+(650 million*$0.70)
=720+455
= 1175 millions.
GDP deflator = (nominal GDP /real GDP) *100
Year 1 =(1065/1065)*100
=100
Year 2 =(1280/1175)*100
=108.94
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
