FIT GDP REVIEW

In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.

In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.

GDP Nominal GDP Deflator Real GDP= X 100

In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.

GDP Nominal GDP Deflator Real GDP= X 100

100120

X 100 = 83

The nominal income of an employee in ChuckEcheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?

The nominal income of an employee in ChuckEcheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?

Real Nominal income income Price index= X 100

The nominal income of an employee in Chuckecheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?

Real Nominal income income Price index= X 100

X__ 1.15

X 100 = 12,000

X = $13,800

Suppose the following table represents the goods and services produced in a very simple economy. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP.

product Quantity Price

Steel 1,000 $100

I pods 5,000 $300

Autos 500 $25,000

Legal services 100 $2,000

Suppose the following table represents the goods and services produced in a very simple economy. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP.

(5,000 x $300) + (500 x $25,000) + (100 x $2,000) =

14,200,000

product Quantity Price

Steel 1,000 $100

I pods 5,000 $300

Autos 500 $25,000

Legal services 100 $2,000

Between 2007 and 2008, if an economy’s exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

The change in net exports will increase GDP by $16 billion

Product Quantity PriceMovies 20 $6Burgers 100 $2Bikes 2 $1,000

Product Quantity PriceMovies 30 $7Burgers 90 $2.5Bikes 6 $1,100

2002 2007

Suppose that a very simple economy produces three goods: movies, burgers, and bikes. The quantities produced and their corresponding prices for 2002 and 2007 are shown in the table above. What is nominal GDP in 2007?

(30 x $7) + (90 x $2.50) + (6 x $1,100) = $7,035

Product Quantity PriceMovies 20 $6Burgers 100 $2Bikes 2 $1,000

Product Quantity PriceMovies 30 $7Burgers 90 $2.5Bikes 6 $1,100

2002 2007

What is the real GDP in 2007, using 2002 as the base year?

(30 x $6) + (90 x $2) + (6 x $1,000) = $6,360

In nominal GDP rises we can say thata. Production has fallen and prices have risenb. Production has risen and prices remain constantc. Production has risen or prices have risen or both have risend. Prices have risen and production remains constante. We can’t say that anything has happened

In nominal GDP rises we can say thata. Production has fallen and prices have risenb. Production has risen and prices remain constantc. Production has risen or prices have risen or both have risend. Prices have risen and production remains constante. We can’t say that anything has happened

You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.

You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.

Real nominal incomeIncome price index in hundredths=

You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.

Real nominal incomeIncome price index in hundredths=

2000 Real income = $25,000

2002 Real income = $27,000 1.08

= $25,000

Change in Real income --- 0%

Economics Review AppsType AP Economics in the search window

Download this free appTake the Unit 02: Economic Performance quiz