Answer to Question #274059 in Macroeconomics for Vii

Question

Now suppose that banking services in year 2 are not the same as banking services in year 1 because

they include internet banking, which year 1 banking services didn’t include. The technology for

internet banking was available in year 1 but the price of banking services with internet banking in

year 1 was $13 and no one chose that package. However, in year 2 the price of banking services

with internet banking was $12 and everyone chose to have that package in year 2 (that is, in year 2

no one chose to have the year 1 banking services package without internet banking).

e. Using year 1 prices, what is real GDP for year 2? What is the growth rate of real GDP?

f. What is the rate of inflation using the GDP deflator?

g. What is the labour productivity growth between year 1 and year 2 for the whole economy?

Answer 1

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