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Question 1 20 pts The table below shows production and prices for a stylized economy. Assume the base year is 2015. Auction Price of Y($) of Z i Year Production Price of X of X ($) Production n of Y Production Price of Z ($) 2015 275 units 15 180 units 23 135 units 80 2016 330 units 15.75 185 units 25 135 units 88 2017 345 units 17 202 units 135 135 units 90 a. Calculate nominal and real GDP for 2015, 2016, and 2017. Nominal GDP 2015: Nominal GDP 2016: Nominal GDP 2017: Real GDP 2015: Real GDP 2016: Real GDP 2017: b. What is the growth rate in real GDP for 2016 and 2017? Growth rate 2016: Growth rate 2017: c. Calculate the GDP deflators for 2015, 2016, and 2017. Using these deflators, calculate inflation in 2016 and 2017? GDP Deflator 2015: GDP Deflator 2016: GDP Deflator 2017: GDP Inflation rate 2016: GDP Inflation rate 2017: d. Assume that the market basket for the typical consumer is given by the quantities in 2015. Calculate the CPI for 2015, 2016, and 2017. What is the CPI inflation rate in 2016 and 2017 Mkt basket 2015: Mkt basket 2016: Mkt basket 2017: CPI 2015: CPI 2016: CPI 2017: CPI Inflation rate 2016: CPI Inflation rate 2017: e. (bonus) Why are these calculations of inflation in cand d different? f. Use the population numbers below to calculate real GDP per capita in all three years. 1. Use the population numbers below to calculate real GDP per capita in all three years. Year Population 2015 150 2016 160 2017 170 Real GDP Per capita 2015: Real GDP Per capita 2016: Real GDP Per capita 2017: g. What is the growth rate in real GDP per capita in 2016 and 2017? Per capita growth rate 2016: Per capita growth rate 2017: h. How many years will it take for this economy to double the living standard? Use the 2017 per capita real GDP growth rate in this calculation Real GDP Per capita 2017: g. What is the growth rate in real GDP per capita in 2016 and 2017? Per capita growth rate 2016: Per capita growth rate 2017: h. How many years will it take for this economy to double the living standard? Use the 2017 per capita real GDP growth rate in this calculation. 1. Are the numbers in part (b) or part () a better indicator of economic growth and standards of living in this economy? Explain. j. What are the three factors that bring about economic growth for an economy?
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