Question 2 Part (a) Refer to the table below for a very simple economy producing three goods: movies, burgers and bikes.

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Question 2 Part A Refer To The Table Below For A Very Simple Economy Producing Three Goods Movies Burgers And Bikes 1 (68.32 KiB) Viewed 96 times

Question 2 Part (a) Refer to the table below for a very simple economy producing three goods: movies, burgers and bikes. Steel bike frames are used for bike production and meat patties are used for making burgers. Product Steel frames Movies Bikes Meat patties Burgers 2015 Quantity Price 10 $5000 30 $10 10 $10000 200 $1.50 200 $2.00 2020 Quantity Price 20 $7500 50 $15 20 $15000 300 $2.00 300 $3.00 What is the nominal GDP in 2020? What was the nominal GDP in 2015? What is the real GDP in 2020 using 2015 prices as base year prices? What is the real GDP growth rate between 2020 and 2015? Part (b) Explain the three main types of unemployment and outline the policies that can be used to reduce each type of unemployment. Part (c) Consider a simple economy that produces only three products: hot dogs, torches and golf balls. Use the information in the following table to calculate the inflation rate for 2018, as measured by the consumer price index. Base Year Product Quantity Price (2017) Price (2009) Price (2018) Hot dogs 10 $1.00 $1.50 $1.75 Torches 15 $5.00 $7.00 $6.75 Golf balls 8 $2.00 $3.00 $3.50 Now assume an investor is negotiating with the bank to pay either a 1.5% interest rate or a 2.0% interest rate on loans advanced. Will she/he be better off with the first or second option? Explain carefully. [20 + 10 + 10 = 40 marks]