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Chapter 8: Q.15 (page 164)

In the table for Problem 8-14, if 2020 is the base year, what is the price index for 2019? (Round decimal fractions to the nearest tenth.)

Short Answer

Expert verified

If 2020 is the base year, the price index for2019is62451.4420.

Step by step solution

01

Introduction

Changes in relative prices are measured in price index.

Nominal GDP is a measurement of economic output in a country that takes current prices into account.

02

Explanation

The base year is 2020

Calculating the real GDP for the year 2019

鈬�(800脳10)+(11脳3000)+(150脳500)+(10000脳2)=240331520000

we multiply quantity into the current year price to find nominal GDP.

Calculating the nominal GDP for the year 2019

鈬�(1000脳10)+(6脳3000)+(100脳500)+(1脳10000)
03

Step 3

Finding the price index for the year 2019 , we have,

鈬�NominalGDPfortheyear2019RealGDPfortheyear2019脳100=150090500010000240331520000脳100=62451.4420

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Most popular questions from this chapter

Take a look at Table 8-4. Provide a possible explanation of why per capita GDP based on purchasing power parity is higher in China and Indonesia than GDP based on foreign exchange rates.

Each year, Johan typically does all his own landscaping and yard work. He spends \(200per year on mulch for his flower beds, \)225per year on flowers and plants, \(50on fertilizer for his lawn, and \)245on gasoline and lawn mower maintenance. The lawn and garden store where he obtains his mulch and fertilizer charges other customers \(500for the service of spreading that much mulch in flower beds and\)50 for the service of distributing fertilizer over a yard the size of Johan's. Paying a professional yard care service to mow his lawn would require an expenditure of $1,200per year, but in that case Johan would not have to buy gasoline or maintain his own lawn mower.

In Table 8-1, what is the total dollar amount that is added to the nation's gross domestic product? Why?

Suppose that U.S. consumption spending is \(13 trillion, gross private domestic investment is \)3.5 trillion, government spending is \(4 trillion, and net exports are \)0.5 trillion. If interest income is \(1 trillion, depreciation is \)0.5 trillion, wages are \(12 trillion, and rental income is \)0.75 trillion, what is the net domestic product?

Why do you suppose that many economists worry that including the degree of depletion or pollution of natural resources could make the value of GDP harder to interpret?
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