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Daily quiz-11 (02/11): Print your name and ID in BLOCK letters.

Daily quiz-11 (02/11): Print your name and ID in BLOCK letters. 1. Beginning January, 2011, Ruth has moved into a new house that she has bought. How will the GDP accounts change because of the change in her circumstances?

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Daily quiz-11 (02/11): Print your name and ID in BLOCK letters.

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  1. Daily quiz-11 (02/11): Print your name and ID in BLOCK letters. 1. Beginning January, 2011, Ruth has moved into a new house that she has bought. How will the GDP accounts change because of the change in her circumstances? The following table provides some information about the economy of Cy-land. Assume 2005 to be the base year. Calculate by how much its output (real GDP) grew between 2007 and 2008. 3. Calculate Cy-land’s inflation rate (using the GDP deflator) between 2006 and 2007.

  2. Answers: The value of the new house will be included in 2011 GDP under Investment. A rental value of the accommodation she is enjoying will be estimated and included as Consumption Expenditure (although she is not paying for it). Real GDP for 2007 = (4 x 120) + (1.50 x 200) = 780 Real GDP for 2008 = (4 x 150) + (1.50 x 200) = 900 Real GDP growth from 2007 to 2008 = ((900 – 780) /780) x 100 = 15.4% approx. GDP deflator for 2006 = (Nominal GDP for 2006/Real GDP for 2006) x 100 = (4 x 100 + 2 x 180)/(4 x 100 + 1.50 x 180) x 100 = 113.4 approx. GDP deflator for 2007 = (Nominal GDP for 2007/Real GDP for 2007) x 100 = (5 x 120 + 2.50 x 200)/(4 x 120 + 1.50 x 200) x 100 = 141 approx. Inflation rate from 2006 to 2007 = ((141 – 113.4)/113.4) x 100 = 24.3 % approx.

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