Week 6 Quiz Economics

9. (TCO E) A Honda Accord sells for $24,000 in the United States and for SF29,500 in Switzerland. Given an exchange rate of SF1.25 = $1, how do the car prices of both countries compare? (Points : 15)  |

Answer: | | | | |

The price of car in Swizerland will be | 30000 |

Honda Accord sold in US for                 $24,000

multiplied by exchange rate                    SF 1.25

equals car price in Switzerland               $30,000

8

8. (TCO F) Country A produces two goods, elephants and saddles. In the year

 2006, the 100 units of elephants produced sold for $2,500 per unit and the 30 units

of saddles produced sold for $200 per unit. In 2007, the 120 units of elephants

 produced sold for $3,000 per unit, and the 50 units of saddles produced sold for

 $300 per unit. Real GDP for 2007, assuming that 2006 is the base year,

is ______. (Points : 15)

Reference:

TCO F) Country A produces two goods, elephants and saddles.  In the year 2006, the 100 units of elephants produced sold for $2,500 per unit and the 30 units of saddles produced sold for $200 per unit. In 2007, the 120 units of elephants produced sold for $3,000 per unit, and the 50 units of saddles produced sold for $300 per unit. Real GDP for 2007, assuming that 2006 is the base year is:

Base year 2006 100 elephants at 2,500 =                           250,000 30 saddles at 200 =                                       6,000GDP =                                                      256,0002007120 units of elephants at 3,000 =             360,000 50 units of saddles at 300 =                      15,000 GDP =                                                    375,000Real GDP with 2006 as the base year 120 units of elephants at 2500 =             300,000 50 units of saddles at 200 =                     10,000 Real GDP =                                            310,000 310,000 – 256,000/310,000 real GDP grew by 17% |

Real GDP is calculated for a given year by using the quantities...