03 Jun Answer the questions as completely as possible.
uestion
Economics 11/4
Answer the questions as completely as possible. Draw diagrams and give examples whenever and wherever, you think, they help make your point. Show all your work to receive full credit for correct answers, and partial credit for incorrect answers.
1.
Majuli, the island country produces only lobsters and crabs. The following table gives the prices and quantities in 2009, 2010 and 2011.
GOODS
2009
2010
2011
Price
Quantity
Price
Quantity
Price
Quantity
Lobster
20
1000
25
1100
30
1100
Crab
10
500
12
525
15
525
a) Calculate Majuli’s Nominal GDP in 2009, 2010, and 2011.
b) Calculate real GDP and GDP Deflator in 2009, 2010, and 2011, taking 2009 as the base year.
c) What can you say about the growth of quantity and prices in 2010 and 2011 from your calculations of real GDP and GDP deflator? Calculate the growth rates to answer this question.
2.
a) Consider the following price indexes: 90 in 2009, 100 in 2010, 110 in 2011, and 121 in 2012. Answer the following questions.
i) What is the base year?
ii) What is the inflation rate from 2009 to 2010?
iii) What is the inflation rate from 2011 to 2012?
iv) If the cost of the consumption basket in 2010 is $2,000, what is the cost of the same basket of goods and services in 2009? In 2012?
b) Currently, the CPI used to calculate the inflation rate is equal to 90. The general expectation throughout the economy is that next year the value of CPI will be 94.5. The current nominal interest rate is 4.75 percent. What is the real interest rate?
3.
Suppose that there are 10 million workers in Canada and that each of these workers can produce either 2 cars or 30 bushels of wheat in a year.
a) What is the opportunity cost of producing a car in Canada? What is the opportunity cost of producing a bushel of wheat in Canada? Explain the relationship between the opportunity costs of the two goods.
b) Draw Canada’s production possibilities frontier. If Canada chooses to consume 10 million cars, how much wheat can it consume without trade? Label this point on the production possibilities frontier.
c) Now suppose that the United States offers to buy 10 million cars from Canada in exchange for 20 bushels of wheat per car. If Canada continues to consume 10 million cars, how much wheat does this deal allow Canada to consume? Label this point on your diagram. Should Canada accept the deal?
Tutorials for this Question
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.