1. Suppose you have a country Z (population = 2,000) with 2-goods.

2007	2008
Qty	Price	Qty	Price
Computers	500	1,000	600	1,200
Vacation package	1,500	2,000	1,800	2,400

*Please show full work.
i. What is the GNP for 2007 in nominal terms? For 2008?
ii. What is the real GNP for 2007?
iii. What is the real growth rate of this economy?
iv. If the US price of computers in 2008 is 800 and the vacation package price is $4,000, what is the PPP GDP per capita of country Z in 2008?
v. Can you say unequivocally that the standard of living has increased for country Z= between these two years?

2. Why does economic growth may not necessarily lead to an improvement in the standard of living? Think of a couple of good reasons.

Answer rating: 100% (QA)

1 i GNP for 2007 5001000 15002000 GNP for 2007 3500000 GNP for 2008 6001200 18002400 ... View the full answer