My Compromise
The First National Bank has reserves of $200,000 and demand deposits equal to $1,500,000. The reserve ratio is 10 percent. How much in excess reserves does the bank now have? What is the maximum amount the bank could currently lend out? try to work it out, and show all work.
(TCO F) Suppose nominal GDP in 2000 was $8 trillion and in 2001 it was $10 trillion. The general price index in 2000 was 100 and in 2001 it was 105. Between 2000 and 2001 real GDP rose by what percent? Show your work.
You need to make use of the inflation formula for the GDP deflator here and compare results between the two years.
For 2000:
100 = [$8 T / Real GDP] x 100 This is just the formula for the GDP Deflator, i.e.:
GDP Deflator = [Nominal GDP / Real GDP] x 100
So, Real GDP must equal $8 T. You could also recognize that Real GDP and nominal GDP are the same in the base year.
For 2001:
105 = [$10 T / Real GDP] x 100
1.05 = [$10 T / Real GDP]
Real GDP = $10 T / 1.05
So, Real GDP must equal $9.524 T.
The percentage increase in Real GDP will then be [(9.524 - 8) / 8] x 100 = (1.524/8) x 100 = 19.05%
You’re simply using a general formula here for any percentage change. In this case:
% change in Real GDP = {[current value for Real GDP (2001) – old value(2000)] / old value} x 100
Therefore Real GDP increases by 19.05% between 2000 and 2001.
Grading Summary |
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 3/18/2012 | Time Spent: | 2 h , 20 min , 23 secs | Points Received: | 91 / 100 (91%) | | Question Type: | # Of Questions: | # Correct: | Short | 10 | N/A | | |
Grade Details |
1. | Question : | (TCO A) There is an increase in the cost of labor for producing bicycles.
(4 pts.) What happens to bicycle supply?
(6 pts.) What happens to bicycle demand? | | | Student
(TCO F) Suppose nominal GDP in 2000 was $8 trillion and in 2001 it was $10 trillion. The general price index in 2000 was 100 and in 2001 it was 105. Between 2000 and 2001 real GDP rose by what percent? Show your work.
You need to make use of the inflation formula for the GDP deflator here and compare results between the two years.
For 2000:
100 = [$8 T / Real GDP] x 100 This is just the formula for the GDP Deflator, i.e.:
GDP Deflator = [Nominal GDP / Real GDP] x 100
So, Real GDP must equal $8 T. You could also recognize that Real GDP and nominal GDP are the same in the base year.
For 2001:
105 = [$10 T / Real GDP] x 100
1.05 = [$10 T / Real GDP]
Real GDP = $10 T / 1.05
So, Real GDP must equal $9.524 T.
The percentage increase in Real GDP will then be [(9.524 - 8) / 8] x 100 = (1.524/8) x 100 = 19.05%
You’re simply using a general formula here for any percentage change. In this case:
% change in Real GDP = {[current value for Real GDP (2001) – old value(2000)] / old value} x 100
Therefore Real GDP increases by 19.05% between 2000 and 2001.
Grading Summary |
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 3/18/2012 | Time Spent: | 2 h , 20 min , 23 secs | Points Received: | 91 / 100 (91%) | | Question Type: | # Of Questions: | # Correct: | Short | 10 | N/A | | |
Grade Details |
1. | Question : | (TCO A) There is an increase in the cost of labor for producing bicycles.
(4 pts.) What happens to bicycle supply?
(6 pts.) What happens to bicycle demand? | | | Student