Answer:
The inflation rate is different using the two methods as the rate of inflation calculated by the CPI holds basket of goods and services constant while the GDP deflator allows it to change.
Explanation:
i. Value of market basket of the good in 2020 = ($50*2) + ($5*6) = $130
Value of market basket of the good in 2021 = ($70*2) + ($6*6) = $176
CPI in 2020 = ($130 / $130) * 100 = 100
CPI in 2021 = ($176 / $130) * 100 = 135.38
Thus, The percentage change in overall price level is = [(135.38 - 100) / 100) * 100 = 35.38%
ii. Nominal GDP in 2020 = ($50 * 20) + ($5 * 60) = $1300
Nominal GDP in 2021 = ($70 * 21) + ($6 * 80) = $1950
Real GDP in 2020 = ($50 * 20) + ($5 * 60) = $1300
Real GDP in 2021 = ($50 * 21) + ($5 * 80) = $1450
GDP deflator in 2020 = (Nominal GDP in 2107 / Nominal GDP in 2107) * 100 = ($1300 / $1300) * 100 = 100
GDP deflator in 2021 = (Nominal GDP in 2108 / Nominal GDP in 2108) * 100 = ($1950 / $1450) * 100 = 134.48
Thus, the percentage change in overall price level is = [(134.48 - 100) / 100) * 100 = 34.48%
Answer:
4-Firm Concentration ratio = 20%
Explanation:
Each firm has equal share
That means 100% share of the industry is divided equally among the 20 firm
Share of 1 firm = 100/20 = 5%
4-Firm Concentration ratio = Share of 1 firm * Number of firm
4-Firm Concentration ratio = 0.05 * 4
4-Firm Concentration ratio = 0.2
4-Firm Concentration ratio = 20%
Answer:
Instructions are listed below.
Explanation:
Giving the following information:
a) What is the present value of $34,900 due 9 periods from now, discounted at 9%
We need to use the following formula:
PV= FV/(1+i)^n
PV= 34,900/1.09^9= $16,068.83
(b) What is the present value of $34,900 to be received at the end of each of 12 periods, discounted at 8%
First, we need to find the final value:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {34,900*[(1.08^12)-1]}/0.08= 662,301.71
PV= 662,301.71/(1.08^12)= 263,009.12
Answer:
Money is a concept which we all understand but which is difficult to define in exact terms. Money is anything serving as a medium of exchange. Most definitions of money take 'functions of money' as their starting point. 'Money is that which money does.
