As a result of a drought, prices and produced quantities in a country change as follows: Assume that the economy produces and consumes only the above agricultural products. a) Calculate the nominal GDP and the real GDP for the year 2021 with the base year 2020. b) By how many percent have the prices of goods increased? c) Calculate the CPI for the year 2021 according to Laspeyres and Paasche. d) Describe the general differences between the CPI and the GDP deflator.
As a result of a drought, prices and produced quantities in a country change as follows: Assume that the economy produces and consumes only the above agricultural products. a) Calculate the nominal GDP and the real GDP for the year 2021 with the base year 2020. b) By how many percent have the prices of goods increased? c) Calculate the CPI for the year 2021 according to Laspeyres and Paasche. d) Describe the general differences between the CPI and the GDP deflator.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
As a result of a drought, prices and produced quantities in a country change as follows:
Assume that the economy produces and consumes only the above agricultural products.
a) Calculate the nominal
b) By how many percent have the prices of goods increased?
c) Calculate the CPI for the year 2021 according to Laspeyres and Paasche.
d) Describe the general differences between the CPI and the GDP deflator.
Transcribed Image Text:Goods
Wheat
Soybeans
Potatoes
Price
(in $)
350
600
200
2020
Quantity
(in mio. tons)
40
10
10
Price
(in $)
400
700
250
2021
Quantity
(in mio. tons)
30
5
25
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