GDP, CPI and Inflation Analysis

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Questions and Answers

How much do the housing services provided by the two houses contribute to GDP?

$12,000

$10,000

$22,000 (correct)

Which of the following is included in the calculation of GDP?

The purchase of a new edition of a foreign textbook that was produced in a different nation.

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

The purchase of a used textbook from a friend who took the same class last year.

The purchase of ink and paper supplies by a textbook company for the production of new textbooks. (correct)

In 2016, what was the real GDP and GDP deflator in this country?

Real GDP was $880, and the GDP deflator was 111.4. (correct)

Real GDP was $780, and the GDP deflator was 112.8.

Real GDP was $780, and the GDP deflator was 88.6.

Real GDP was $880, and the GDP deflator was 112.8.

What were the figures for real GDP and GDP deflator in 2017?

Real GDP was $900, and the GDP deflator was 138.9. Signup and view all the answers

What was the inflation rate from 2016 to 2017?

23.1% Signup and view all the answers

If 2012 is the base year, what were the consumer price index values for 2012, 2013, and 2014?

100 in 2012, 124.2 in 2013, and 133.3 in 2014. Signup and view all the answers

What were the inflation rates in 2013 and 2014?

23.8 percent in 2013 and 7.7 percent in 2014. Signup and view all the answers

What was President Herbert Hoover's salary in 1931?

$75,000 Signup and view all the answers

What is the equivalent 2015 salary of President Hoover’s 1931 salary of $1,000 based on the consumer price index data?

$1,169,408 Signup and view all the answers

If Ken's earnings in 2015 were $78,000, how much would he need to earn in 2015 for his standard of living to improve compared to his 2000 income?

$87,000 Signup and view all the answers

What is the total investment in Growpaw if its GDP is $20 billion, government purchases are $3 billion, taxes collected are $4 billion, and private saving is $4 billion?

$4 billion Signup and view all the answers

What is the correct breakdown of investment and consumption in Cedarland given a GDP of $17 billion and government purchases of $5 billion?

Investment is $7 billion and consumption is $6 billion. Signup and view all the answers

What impact does a government budget deficit have on national saving?

Reduces both public and national saving. Signup and view all the answers

How much do the actions of selling milk and containers contribute to the GDP if a dairy sells milk for $60,000 and incurs $50,000 in costs and $5,000 for cartons?

$65,000 Signup and view all the answers

When a U.S. citizen buys $500 of Chinese-made parts, what immediate economic effect occurs concerning U.S. GDP?

U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $500. Signup and view all the answers

What is the relationship between private saving and investment in Growpaw with its specific economic parameters?

Private saving exceeds investment, leading to surplus. Signup and view all the answers

Study Notes

GDP & Housing Services

Housing services provided by the two houses contribute $22,000 to GDP
$10,000 is earned from renting one house
$12,000 is the potential rent from the house James lives in

GDP & Included Items

GDP includes the purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country
GDP does not include the purchase of a new edition of a foreign textbook

GDP Components & Inflation

In 2016, the country's real GDP was $780 and GDP deflator was 112.8
Real GDP was $900 in 2017, while the GDP deflator rose to 128.0
This country experienced an inflation rate of 18.8 percent from 2016 to 2017

CPI & Inflation

The consumer price index was: 100 in 2012, 123.8 in 2013, and 133.3 in 2014
The inflation rate was 23.8 percent in 2013 and 7.7 percent in 2014.

Real Income & CPI

President Hoover’s 1931 salary was equivalent to a 2015 salary of about $1,057,894
Ken's standard of living would have improved relative to his 2000 income if he had earned $87,000 or more in 2015

Investment & Trade

Investment in Growpaw is $5 billion
This is calculated by adding private saving (4billion)andthegovernmentbudgetdeficit(4 billion) and the government budget deficit (4billion)andthegovernmentbudgetdeficit(1 billion).

Investment, Consumption & Trade

Investment in Cedarland is $7 billion
Consumption is $6 billion

Government Budget Deficit

A government budget deficit reduces both public and national saving

GDP & Production

The actions of the dairy, grocery store, and consumers add $65,000 to GDP
This represents the final sale of goods to consumers

International Trade

When a US citizen buys $500 of Chinese-made parts for a motorcycle
- US consumption falls by $500
- US net exports decline by $500
- US GDP declines by $500

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Description

This quiz explores key concepts related to GDP, inflation, and the Consumer Price Index (CPI). It covers topics such as housing services contribution to GDP, components included in GDP, and inflation rates across different years. Test your understanding of these economic indicators and their implications.