Exhibit: Quantity Consumed and Price of Good In the Exhibit, the Citizens of Country XYZ Come to c

question 73

Essay

Exhibit: Quantity Consumed and Price of Good $$\begin{array} { l c c } & \text { Base Year } & \text { Later Year } \\\text { Price of good A } & 100 & 200 \\\text { Quantity of good A } & 100 & 200 \\\text { Price of good B } & 100 & 100 \\\text { Quantity of good B } & 100 & 100\end{array}$$ In the exhibit, the citizens of country XYZ come to desire more of good A. As a result, the quantity and price of the good both rise. a. Compute nominal GDP in the base year and later year.
b. Compute real GDP in the base and later years (in base-year prices).
c. Compute the GDP deflator in the later year, using your answers to parts a and $b$ .
d. Compute a fixed-weight price index for the later year, using the base-year quantities as weights.
e. Which price index rises faster, the GDP deflator (Paasche) index or the fixed-weight index (Laspeyres) index?

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Definitions:

Benzene

An aromatic hydrocarbon with a molecular formula C₆H₆, recognized for its simple ring structure and used as a precursor in the production of various chemicals.

Resonance Structures

Different Lewis structures that represent the same molecule, showing the delocalization of electrons within the molecule.

Resonance Structures

Different Lewis structures representing the same molecule, illustrating potential distributions of electrons and bonds.

Ozone

A molecule composed of three oxygen atoms, known for its role in the Earth's stratosphere where it absorbs and protects living organisms from the sun's harmful ultraviolet radiation.