Suppose a country produces two final goods, Pizzas (Ps) and Tacos (Ts). In Year 1 it produced 10...
Question:
Suppose a country produces two final goods, Pizzas (Ps) and Tacos (Ts). In Year 1 it produced 10 Ps at a price of $5 each and 50 Ts at a price of $1 each. In Year 2 it produced 15 Ps at a price of $6 and 50 Ts at a price of $2. If Year 1 is the base year, the inflation rate in the GDP deflator between Years 1 and 2 is 52%. Is this true or false? Why?
GDP Deflator:
In economics, GDP deflator measures the changes in aggregate price levels in an economy. For a given year, the GDP deflator is calcualted as the the ratio of nominal GDP to real GDP.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe statement is true.
GDP deflator = (nominal GDP / real GDP) * 100
Nominal GDP in year 2 = 15*6 + 50*2 = 90 + 100 = 190. Using year 1 as the base...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
The GDP Deflator and Consumer Price Index
from
Chapter 5 / Lesson 2
13K
Learn about the GDP price index. Identify the difference between the GDP deflator and CPI, and discover how to calculate inflation with the GDP deflator.
Related to this Question
- Imagine you've started a new pizza restaurant. It costs you about $6 to produce a pizza. Last week you sold 500 pizzas for $12 each. This week you raised your price and sold 375 pizzas for $14 each. What price should you be charging?
- Suppose a consumer has an income I = $150 which he/she spends on pizza and tacos per month. The price of pizza is $20 and the price of tacos is $10. If the units of pizza consumed per month is on the x-axis and the units of tacos consumed per month is on
- Suppose a consumer has an income I = $48 which he/she spends on pizza (x) and tacos per month (y). The price of pizza is $8 and the price of tacos is $2. If the units of pizza consumed per month is on the x-axis and the units of tacos consumed per month i
- Imagine you've started a new pizza restaurant. It costs you about $3 to produce a pizza. Last week, you sold 450 pizzas for $12 each. This week, you raised your price and sold 300 pizzas for $16 each.
- Suppose a consumer spends $48 on pizza and tacos per month. The price of pizza is $8 and the price of tacos is $2 per unit. If the units of pizza consumed per month is on the x-axis and the units of tacos consumed per month is on the y-axis, which of the
- Suppose a pizza parlor has the following production costs: $5.00 in labor per pizza, $4.00 in ingredients per pizza, $0.40 in electricity per pizza, $4,000 in restaurant per month, and $400 in insuran
- Suppose a pizza parlor has the following production costs: $5.00 in labor per pizza, $2.00 in ingredients per pizza, $0.20 in electricity per pizza, $5000 in restaurant rent per month, and $500 in ins
- Suppose the United States is currently producing 160,160 tons of hamburgers and 7,272 tons of tacos and Mexico is currently producing 1,616 tons of hamburgers and 4,040 tons of tacos. If the United St
- Year ; Beer Produced ; Price of Beer ; Pizzas Produced ; Price of Pizza ; 2002 ; 80 ; $5.00 ; 40 ; $4.00 ; 2009 ; 90 ; $6.00 ; 60 ; $10.00 ; Consider the table above describing the economy of Pazzolan
- Suppose a pizza parlor has the following production costs: $5 in labor per pizza, $4 in ingredients per pizza, $0.60 in electricity per pizza, $5,000 in restaurant rent per month, and $200 in insurance per month. Assume the pizza parlor produces 2,000 piz
- The price of pepperoni, a key ingredient in the making of pizza, rises. At the same time, the price of beer falls. As a result, in the market for pizza: A) P' and Q' both rise B) P' and Q' both fall C) P' rises and Q' falls Sie D) P' falls and Q' rise
- Given the table below. Suppose the price of wine (PW) in the home country before the trade is equal to 4. What is the price of cheese? What is the wage (W)?
- Suppose an economy produces two products: meat pies and MP3s. In 2011, 20 meat pies were sold at $5 each, and eight MP3s were sold at $50 each. In 2010, the base year, the price of meat pies was $10 each, and the price of MP3s was $75 each. Therefore: A.
- Suppose that Greece and Germany both produce jeans and cheese. Greece's opportunity cost of producing a pound of cheese is 4 pairs of jeans while Germany's opportunity cost of producing a pound of ch
- a. Suppose the price of hotdogs in years 1, 2, and 3 is $1, $2, and $3. The price of veggie burgers is $2, $3, and $4 for those years. The basket of goods is 4 hot dogs and 2 veggie burgers. Compute the cost of the basket for the first year. b. compute th
- You produce quesadillas (Q) with beef (B) and cheese (C). The production process is as so: Q = 40 B - 1.5 B^2 + 50 C - 1.5 C^2 The price of beef is $4 per box, and the price of cheese is $5 per box. The boxes are the same size and you only have room for 9
- Consider the possibility that there is a taco truck on every corner. The demand for tacos can be expressed as P= 600 -.1Q . Consider that each taco truck has a cost function such that C=450 +3.2Q+(
- 16. Suppose that France and Sweden both produce oil and cheese. France's opportunity cost of producing a pound of cheese is 3 barrels of oil while Sweden's opportunity cost of producing a pound of c
- Suppose the price of hot dogs in years 1, 2, and 3 is $1, $2, $3. The price of veggie burgers is $2, $3, $4 for those years. The basket of goods is 4 hot dogs and 2 veggie burgers. Compute the cost of the basket for the first year.
- When the price of pizza was $10.00 for a medium pizza, students at a college consumed 400 pizzas per week. When the price of pizza increased to $30.00 for a medium pizza, students at a college consumed 100 pizzas per week. a. Calculate the price elastici
- Suppose that the consumers buy 5 apples and 3 oranges every year (basket of goods), and the price of each one was showed as the following: || || 2012 || 2013 || 2014 | Apple | $2 |$3 | $4 | Orange
- Suppose that Italy and Sweden both produce fish and shoes. Italy's opportunity cost of producing a pair of shoes is 4 pounds of fish, while Sweden's opportunity cost of producing a pair of shoes is 8
- Suppose that Marky has a utility function for two goods, hot dogs (H) and pizza slices (P), is U(H,P) = 3H + 4P The price of a hot dog is $1 and the price of a slice of pizza is a $2 per unit; and Ma
- Suppose that the price of one taco is $1 in the U.S. and that tourists can buy a taco in Mexico for 2.50 pesos. If the nominal exchange rate is 7.50 pesos per dollar, which of the following statements are true? A. The real exchange rate is 1/3 Mexican tac
- Suppose that Italy and Sweden both produce beer and olives. Italy's opportunity cost of producing a crate of olives is 5 barrels of beer while Sweden's opportunity cost of producing a crate of olives
- Suppose that Switzerland and Italy both produce rye and cheese. Switzerland's opportunity cost of producing a kilogram of cheese is 8 \ kg or rye, while Italy's opportunity cost of producing a kilogram of cheese is 4 \ kg of Rye. 1) Which country has a co
- Suppose that there is a hurricane that wipes out a significant portion of Mexico's avocado production. As a result, the price of avocado toast in San Francisco increases from $10.00 to $10.50. In the week after the price change, the number of orders of av
- Suppose an economy produces two products: meat pies and MP3s. In 2011, 20 meat pies are sold at $5 each, and eight MP3s are sold at $50 each. In 2010, the base year, the price of meat pies was $10 eac
- Suppose you want to calculate a university price index (UPI). Let's keep things simple and assume that a typical student buys seven textbooks, nine pizzas, and twelve six-packs of beer in a year. The table below shows this market basket and the price of e
- Suppose you win a sweepstake that allows you to consume as much pizza as you want within a year. Despite the zero price of a pizza, you do not eat pizza every meal. This is because: a. of diminishing the total utility of pizza. b. of diminishing average
- Wages in the tortilla chip industry rise. At the same time, the price of salsa falls. As a result, in the market for tortilla chips: A) P* and Q* both rise B) P* and Q* both fall C) P* rises Q* and falls D) P* falls and Q* rises E) P* and Q* do not c
- Assume two markets: Pizza = Q_s = 5 + 8 P_p Q_d = 10 - .2 P_p + P_h Hamburger = Q_S 20 + P_h Q_d = 40 - 3 P_h +2 P_p Required: Find the price of pizza and hamburger that clears both markets at the same time.
- Consumers in England consume only two goods, magazines and pizza. If they spend $50 on magazines and $90 on pizzas a month, how many magazines and pizzas are in their CPI market basket if the price of
- Suppose that Greece and Sweden both produce oil and cheese. Greece's opportunity cost of producing a pound of cheese is 4 barrels of oil while Sweden's opportunity cost of producing a pound of cheese is 10 barrels of oil. By comparing the opportunity cost
- Suppose that Italy and Switzerland both produce rye and wine. Italy's opportunity cost of producing a bottle of wine is 5 bushels of rye while Switzerland's opportunity cost of producing a bottle of w
- Italy and the US can each produce Pasta and Pizza as follows: At which of the following prices will the US and Italy be willing to trade each other? a) 1lb of Pasta for 1 pizza b) at no price will t
- Suppose that Italy and Germany both produce fish and wine. Italy's opportunity cost of producing a bottle of wine is 4 pounds of fish while Germany's opportunity cost of producing a bottle of wine is
- Assume two markets: Pizza= Q_s = 5+8P_p, \ Q_d = 10 - 0.2P_p + P_h Hamburger= Q_s 20 + P_h, \ Q_d = 40 -3P_h + 2P_p Find the price of pizza and hamburger that clears both markets at the same time.
- What effect could the following have on the supply for pizza? a. The price of cheese increases. b. A new pizza franchise named Pizza Palace enters the market. c. A new pizza oven is created that cuts the time in half to cook a pizza. d. If you lived
- Suppose you are given a monthly income of $200 to spend on food while at college. Further, suppose the price of a single-service pizza is $4 and the price of a deli sandwich is $2. Which one of the following consumption combinations is possible given the
- Suppose that Spain and Switzerland both produce rye and olives. Spain's opportunity cost of producing a crate of olives is 5 bushels of rye while Switzerland's opportunity cost of producing a crate of
- The table belwo represents the hourly output and cost structure for a local pizza shop. The market is perfectly competitive, and the market price of a pizza in the area is $12. Total cost include all
- Janco produces and sells specialty pizzas. Last year, it produced 8,000 pepperoni, ham, and mushroom pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. Janc
- Suppose that France and Portugal both produce cheese and wine. France's opportunity cost of producing a bottle of wine is 2 pounds of cheese. That is, France forgoes the production of 2 pounds of chee
- Suppose that Portugal and Sweden both produce rye and cheese. Portugal's opportunity cost of producing a pound of cheese is 5 bushels of rye while Sweden's opportunity cost of producing a pound of cheese is 11 bushels of rye. By comparing the opportunity
- Suppose that Greece and Sweden both produce rye and cheese. Greece's opportunity cost of producing a pound of cheese is 4 bushels of rye while Sweden's opportunity cost of producing a pound of cheese is 9 bushels of rye. By comparing the opportunity cost
- If the current price of pizza is $.50 per slice, what is lance's consumer surplus? Price (dollars) Quantity of pizza 1 1 2 2.10 2 3 1.70 3 4 1.30 4 5 .90 5 6 .50 6
- If the price of tacos is $1, what is P_1? A. $1.50 B. $1.00 C. $0.50 D. $2.00
- Suppose the price of bagels in Allentown is currently $0.75 per bagel. There are 10 low-cost bakeries that can produce bagels, each of which has the supply function Qs = 200P - 100. There are 10 high-cost bakeries that can produce bagels, each of which ha
- The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. Year Price Of Waffles Quantity of Waffles Price of Pancakes Quantity of Pancakes 2010 2.00 80 1.00 100 2011 2.00 100 2.00 120
- Suppose that Spain and Switzerland both produce beer and wine. Spain's opportunity cost of producing a bottle of wine is 4 barrels of beer while Switzerland's opportunity cost of producing a bottle of
- Suppose that in the country of Japan, the price of bread is 175 yen. That same loaf of bread is priced at $1.50 in the U.S. Assuming that bread is a representative good and that 1 USD = 100 Yen. Descr
- Imagine you own a pizza place, and you had a costs $c of producing each pizza, excluding the salary to the chef (i.e. the value $c only includes the dough, toppings, wood for the oven, etc, but not th
- Suppose that the average sawtimber stumpage price is now $350/mbf. a. If, over the next 20 years these stumpage prices increase at a real rate of 1% per year, what will the real stumpage price be in 2
- A statistician estimates the demand for pizzas (x_1) to be given by: x_1 = 20 + 0.1m - 2p_1 + 0.5p_2, where m is the income, p_1 is the price of the pizzas and p_2 is the price of a bucket of fried ch
- The table below represents the hourly output and cost structure for a local pizza shop. The market is perfectly competitive, and the market price of a pizza in the area is $10. Total costs include all
- The table represents the hourly output and cost structure for a local pizza shop. The market is perfectly competitive, and the market price of a pizza in the area is ?$10. Total costs include
- The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. Year Price of Waffles Quantity of Waffles Price of Pancakes Quantity of
- Consider a pizzeria that earns its owner an annual profit of $200,000. Each year it purchases ingredients worth $100,000, pays workers $200,000, and sells pizza worth $500,000. What is its value added? A. $100,000 B. $400,000 C. $300,000 D. $200,000
- At the beginning of 2015, a 40-pound box of limes costs approximately $26. However, by the end of 2015, the price of a 40-pound box of limes spiked to $130. Mexico, the world?s largest producer and ex
- Suppose that Portugal and Sweden both produce rye and shoes. Portugal's opportunity cost of producing a pair of shoes is 3 bushels of rye while Sweden's opportunity cost of producing a pair of shoes i
- Suppose that Donald has $200 to spend per week and he buys only ice cream and pizza. Suppose further than pizza is a normal good and that for pizza income effect dominates the substitution effect. If the price of a pizza doubles, which of the following is
- The price of a slice of pizza at a local pizzeria is $5.00, and the quantity demanded at this price is 50 slices. When the price is increased to $5.50, the quantity demanded for pizza slices falls to 30 slices. An analyst working in this area reveals that
- Assume there is a Period 5 (Pd 5), and the price of a hamburger is now $4.25, the price of aspirin is $10.75, and the price of movies is $9.50. What is the total amount spent in Period 5 on this basket?
- Suppose that California rice costs $100 a bushel, and Japanese rice costs 20,000 yen. 1) What exchange rate would make the rice equally priced in the local currency? a. $1/yen b. $0.01/yen c. $0.0050/yen d. 100 yen/$1 2) If the rice rose to 40,000 yen, wh
- Suppose that the company Mama's Pies adds another store to sell its pastries. Supposed that it costs $400,000 to build the new store and assume that the new store will generate revenues of $450,000. W
- The Tacqueria Pablano (TP) restaurant chain just completed a study of weekly demand for its traditional tacos across its 50 regional markets. The study revealed: Q_D=400-1200P + 0.8A + 55Pop + 800P_c, where Q_o is the no. of TP tacos sold/week at Price
- Assume that the price of a pizza is $15, the price of a compact disk is $15, and the price of a movie is $5. How many units of pizza will C. Chang consume if he spends all of his income of $90 a month on these three goods. a. two b. three c. four d. five
- Assume that the price of a pizza is $10, the price of a compact disk is $15, and the price of a movie is $5. How many units of pizza will C. Chang consume if he spends all of his income of $90 a month on these three goods? a. two b. three c. four d. five
- Antonio's Pizza has the following willingness to sell. Determine Antonio's producer surplus at a price of A. $10. B. $12. C. $15. D. $8.
- Suppose that Spain and Denmark both produce rye and wine. Spain's opportunity cost of producing a bottle of wine is 5 bushels of rye while Denmark's opportunity cost of producing a bottle of wine is 1
- Suppose that France and Austria both produce jeans and olives. France's opportunity cost of producing a crate of olives is 4 pairs of jeans while Austria's opportunity cost of prod
- Suppose that Tiffany has an income of $20 per week and she spends it on frozen pizza (P) and beer (B).The price of a bottle of beer (PB) is $1 and the price of frozen pizza (Pp) is $5 per pizza. (a)
- You purchase a pizza oven that is expected to last 10 years for $15,000. How do you account for the economic cost of the oven? A. The cost is the price of the oven minus any revenue made selling pizzas made in the oven. B. Calculate the value of renting
- Suppose Icecream company has gained exclusive rights to sell Icecream in State College. The demand for Icecream is Q = 3000 - 60P. The total cost of producing Icecream is C(Q) = 6Q for Q orders of the
- Mario's can produce a pizza for a marginal cost of $6. Its price is a pizza for $20. (a) Could Mario's pizza make a larger economic profit by offering a second pizza for $5? (b) Could Mario's Pizza make more money by offering a coupon that credits for $4?
- Suppose that France and Austria both produce fish and olives. France's opportunity cost of producing a crate of olives is 4 pounds of fish, while Austria's opportunity cost of producing a crate of olives is 10 pounds of fish. 1) By comparing the opportuni
- Mario's Pizza can produce a pizza for a marginal cost of $6. Its price is a pizza for $20. (i) Could Mario make a larger economic profit by offering a second pizza for $5? (ii) Could Mario make more money by offering a coupon that credits for $4? Should
- Predict the total revenue generated by the nations corn crop. Last year's crop was 100 million bushels and the price was $5 per bushel.
- Consider a country whose two primary commodities are apples and peaches. For apples: the market basket quantity is 40 pounds, the 1995 price was $4.00, while the 1996 price was $4.75. For peaches, the
- Suppose a pizza vendor at a basketball game can sell 3,000 slices of pizza per night at a price of $3 per slice. If the vendor raises the price to $4 per slice, the number of slices sold falls to 2,000. Based on this information, what is the price elastic
- Refer to the table, which gives the total cost schedule for Chip's Pizza Palace, a perfectly competitive firm. If the price of a pizza is $7, what is Chip's profit-maximizing output per hour? A) zero pizzas B) 1 pizza C) 2 pizzas D) 3 pizzas E) 4 piz
- Record US bean crop up 24% is forecasted for the year. The USDA reported that world bean production will be 9.9% greater than last year's, while US bean production will be 24% larger. The price of beans is expected to be 46% higher than last year's price.
- Suppose that the comparative-cost ratios of two products mangoes and sardines are as follows in the hypothetical nations of Mangolia and Sardinia: \\ Mangolia: 1 mango = 2 cans of sardines Sardinia: 1 mango = 4 cans of sardines \\ In this scenario, {B
- Suppose that France and Austria both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while 1 Austria's opportunity cost of producing a crate of o
- Assume that whole milk is a normal good. What would happen to the market for whole milk in each of the following cases: a. The price of breakfast cereal falls b. The price of 2% milk falls c. U.S. dairy farmers increase the production of milk d. An ad
- Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two goods are produced and consumed: steak and potatoes. The production opportunity cost for Casey is
- Paul consumes only two goods, pizza (P) and hamburgers (H), and his utility function is given by U(P, H) = P + 4H. The price of pizza is $3 and the price of hamburgers is $6, and Paul's income is $300. Knowing that he likes pizza, Paul's grandmother gives
- When Dave receives a pay increase, his income increases. Dave has a budget constraint model that gives him the choice of pizzas or tacos for lunch. With his pay raise, Dave's budget increases from ten dollars to twenty dollars a week for pizzas and tacos.
- Mexico is implementing a tax on sugary drinks and other high-calorie snack foods to improve health outcomes in Mexico. 1. What type of price elasticity of demand is the Mexican Government assuming soda and snack foods have? 2. What type of issues with th
- A local firm produces three types of Pizza, for delivery to homes in the area. The owner has completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 80
- Suppose that Clancy and Eileen are the only suppliers of pizza slices in a particular market. The following table shows their weekly supply schedules: Price Clancy's Quantity Supplied Eileen's Quantit
- Suppose the price of bagels in Allentown is currently $1.05 per bagel. There are 10 low-cost bakeries and 10 high-cost bakeries that can produce bagels, each of which has the supply function low-cost bakery: Qs(low-cost) = 200P - 125 high-cost bakery: Q
- Suppose for the 3rd year in a row, the harvest of wheat in the US continues to decline. Imports are being used to make up for the shortages in the US. In addition, the US government decides to establish a price ceiling to help families who cannot afford t
- The countries of Cali and Fornia have different cost ratios for salami and cheese: Cali: 1 pound of salami = 5 pounds of cheese, and Fornia: 1 pound of salami = 7 pounds of cheese. a) Assuming that t
- Assume the table below shows the quantities of bananas and pineapples that a plot of land can produce in a growing season in Columbia and the Philippines. Bananas Pineapples Columbia 40 4 The Philippines 20 32 Suppose each country has 2,000 plots of land
- Suppose the price of DVDs (D) is $20.00 and the price of CDs (C) is $20.00. Phillip has a budget of $100.00 to spend on the two goods. Suppose that he has already bought 1 DVD and 1 CD. In addition, there are 3 more DVDs and 3 more CDs that he would reall
- Suppose that one canister of Pringles costs 25 Pounds, Macadamia Nuts costs $5 per can, and that the relative price of Pringles in terms of Macadamia Nuts is 3 cans per canister. Calculate the following: a) The dollar-pound exchange rate, i.e. the price
Explore our homework questions and answers library
Browse
by subject