A number of statistics are computed to measure the price level, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in many cases on the specific question in which you are interested. For each of the following situations, state whether the CPI or GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. a. You are interested in looking at the impact of higher prices of imported oil in the overall cost of living. b. The government is interested in whether increases in defense spending are affecting the price level. c. An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production.

A number of statistics are computed to measure the price level, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in many cases on the specific question in which you are interested. For each of the following situations, state whether the CPI or GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. a. You are interested in looking at the impact of higher prices of imported oil in the overall cost of living. b. The government is interested in whether increases in defense spending are affecting the price level. c. An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 5CQQ

See similar textbooks

Similar questions

The basket of goods in the Consumer Price Index consists ofabout _________ products; that is, several hundred specific products in over__________ broad-item categories. a)800; 200 b)80,000; 400 c)200; 800 d)80,000; 200
The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?
There are a number of statistics computed to measure the price level of an economy, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in many cases on the specific question you are interested in. For each of the following situations, explain whether the CPI or the GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. (a) The government is interested in whether increases in defense spending are affecting the price level. (50 words) (b) An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production.
2. The following table shows an example of gross domestic product values for five countriesfrom 2005 to 2010 in equivalent U.S. dollars ($). a. How could you improve the readability of this table?b. The file GdPyears contains sample data from the United Nations Statistics Divisionon 30 countries and their GDP values from 2005 to 2010 in U.S. dollars ($). Create atable that provides all these data for a user. Format the table to make it as easy to readas possible.
Suppose you are asked to compare the variation in housing rental prices in the Eastern Caribbean measured in Eastern Caribbean dollars to housing rental prices in Jamaica measured in Jamaican dollars, explain the most appropriate statistic to use making sure to say why
Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburgers, shirts, and cotton. Further, assume that all af the ontton is used to produce shts 2012 Statistics 2020 Statisties 2021 Statistics Product Quantity 120 Quantity Price Quantity Price Price $75.00 3.50 Shoes 110 $55.00 120 $70.00 Hamburgers 85 3.00 120 3.00 135 Shirts 50 30.00 50 25.00 66 25 00 Cotton 12,000 0.09 12.000 0.07 13.000 0.08 af the base year is the year 2012, then real GDP for 2020 equals $ (round you answer to the nearest pennyl and the real GDP for 2021 equals S (round your answer to the nearest pennyl. b. The (annual) growth rate of real GDP in 2021 is %. (Enter your response as a percentage rounded to hwo decimal places.)
The expenditures of a typical family on gas, food,and clothing in 2009 and 2010 are given in the table below. Assume quantses are constant trom 2009 to 2010. Expenditures in 2009 (in S) S60 310 80 Category Expenditures in 2010 (in S) Gas 568 Food 341 24 Clothing When the base year is 2009 the value of Consumer Price index (CPI) for year 2010 is (Round your response to wo decimal places) Incorrect: 1 Check answer Clear all
18. The following are the index numbers of wholesale prices of a commodity based on 2011: Year Index Numbers Year Index Numbers 2011 2012 100 1102013 150 210 225 240 2015 2016 100 108 120 150 2017 2014S Prepare new Index Numbers taking 2013 as base.
Which measures the changes in the prices of a "market basket" of some 100 goods produced by typical manufacturers? O The Producer Price Index O The Consumer Price Index O The GDP price index O The International Pricing Index
The economy of country Y produces 5 commodities; rice, salted fish, sugar, salt, and oil. The following table shows the outputs and prices for year 2000, 2001 and 2002. Instructions calculate Paasche consumer price index for 2001 and 2002 using 2000 as base year!
Consumer price index, based on a problem from “Principles of Economics” byN. Gregory Mankiw Question 3) Wen is a typical consumer. Wen spent a total of $10 on 10 pomegranates, $36 on 3 shawarmas,and $35 on 7 cups of coffee in August. In September, Wen spent a total of $18 on 12 pomegranates, $24on 2 shawarmas, and $42 on 7 cups of coffee. In October, Wen spent a total of $22 on 11 pomegranates,$33 on 3 shawarmas, and $32 on 4 cups of coffee. a) Calculate the price of one unit of each good in each month.b) Using August as base month, calculate the CPI for each month.c) Find the inflation rate for September and October.
The difference between the formulae used in the computations of CPI and GDP deflatorisa) The CPI uses a Laspeyer Index, whereas the GDP deflator uses a Paasche indexb) The CPI uses a Paasche Index, whereas the GDP deflator uses a Laspeyer indexc) The CPI uses a geometric mean of price relatives, whereas the GDP deflator usesan arithmetic averaged) The CPI uses an arithmetic average of price relatives, whereas the GDP deflatoruses a geometric mean.