answer every question in pdfs
Complete this assignment on Canvas, where it is Assignment 2. Due by 6pm on Friday May 7th. Preamble for Questions 1-8. Consider a sh/ shing rod economy, with Crusoe and Friday the entire population. The local currency is the dollar, and the prices of a sh and a shing rod are $5 and $25 respectively. Over the year Friday spends all his time making shing rods for himself, Crusoe all his time shing (by tickling them). Over the year Friday successfully completes 40 shing rods (which Friday keeps) and Crusoe catches 200 sh (of which he eats 45). Friday borrows 60 sh from Crusoe and eats those over the year; he will repay Crusoe with 75 sh next year. They form a government to which each contributes $9: in taxes, where a: is some number; the government buys 30 sh from Crusoe to feed to the governmental hound, Banga. Any sh that Crusoe catches that he does not eat, lend to Friday or sell to the government, he sells to a neighbouring island (i.e. abroad). Your answers to questions 1-8 should just be numbers, i.e. should not feature x. 1. What is Y, total GDP in this economy? 2. What is I, total investment spending in this economy? [As usual, treat Friday as buying the shing rods that he makes from himself, so that his investment spending is equal to the value of his output] 3. What is the value of net exports NX? 4. What are national savings S = S? + S 9? [Your answer should just be a number, i.e. should not feature 3.] 5. What is the real interest rate in this economy? [If you think the answer is 50%, write 50 and not 0.5.] 6. Suppose government savings 55' are equal to $250. What are Friday's individual private savings equal to? Preamble for Questions 7-8. Consider two changes to the economy. Suppose that, of the 45 sh that Crusoe was eating, he instead only eats 30 sh and buries 15 in the ground to keep for next year. Suppose also that Friday exports 10 of the shing rods he makes and keeps 30. These are the only changes to the economy as originally described. 7. With these changes, what then would be the value of investment I? 8. With these changes, what then would be the value of national savings S = 5\" + SQ? Preamble for Questions 9-15. Consider a fictional cookie/ doughnut economy. The table below has details of how many cookies and doughnuts are produced each year, and the market prices of each. year cookie price # cookies doughnut price # doughnuts 2017 $2 100 $1 100 2018 $3 300 $3 200 2019 $5 300 $4 300 In questions 11, 12, 14 & 15 you are asked for an inflation rate. If you think it is (say) 30%, write 30 and not 0.3. 9. What is nominal GDP in 2018? 10. What is real GDP in 2018, if the base year is 2017? 11. With the base year still 2017, what is the inflation rate DEF between 2018 and 2019? Remember that DEF is just the growth rate of the GDP deflator. 12. If the base year is 2018 rather than 2017, what then is the inflation rate DEF between 2018 and 2019? . . . . Preamble for Questions 13-15. The local statistical agency determines that the representative consumption basket (based on surveys from 2015) comprises 1 cookie and 4 doughnuts. [Note that the prices of cookies and doughnuts from 2017-2019 are still those given in the table above.] 13. With the base year of 2017, what is the value of the CPI in 2018? 14. With the base year still 2017, what is the inflation rate between 2018 and 2019? Remember that TCP is just the growth rate of the CPI. 15. If the base year is 2018 rather than 2017, what then is the inflation rate between 2018 and 2019
