Question1: Assume that in the Economy only two goods are produced: Pencils and Erasers. Macroeconomics information for
Question:
Question1:
Assume that in the Economy only two goods are produced: Pencils and Erasers. Macroeconomics information for this economy is given in below
a. What is the value of Nominal GDP in 2011 and 2012? What is the percentage increase?
b. What is the value of Real GDP in 2011 and 2012, by considering 2011 as the base year? What is the percentage increase?
c. What is the value of the GDP deflator in the two years? By what percentage does the price level
change from the base year to 2012?
d. Was the increase in Nominal GDP due more to an increase in prices or in the volume of output?
e. What was the growth rate of average labor productivity for the whole economy between 2011 and 2012?
2011 2012
Output (Pencils) 100 110
Output (Erasers) 200 220
Employment (Pencils) 500 600
Employment (Erasers) 500 500
Price per Pencil $1.00 $1.50
Price per Eraser $1.00 $1.10
Expert Answer:
a Nominal GDP output value at current year prices 2011 NGDP 2011 Output pencil 2011 price pencil 201... View the full answer
