Project #1006 - Economics questions

1) A. How does the production of war materials and the production of a cure for cancer factor into GDP and quality of the life?B. What are two other limitations on the use of GDP as an economic indicator?
 
2) Explain what Demand-Push inflation is and what might the Federal Reserve do in order to control this problem?
 
3) Stella's Strawberry Farm grows 10 million baskets of strawberries each year. In the year 2005, she sells her strawberries for $5.00 per basket. However, in the year 2006 the cost of strawberry seeds and fertilizer has increased. This is a cost-push inflation examplem. A. Explain how this situation fits the description of Cost-Push Inflation. B. Describe how this effects the supply curveC. What broad-range effects might this have on the circuluar flow model?

4) CPI is the total dollar amount of a market basket of items in any given year. Based on this answer the following questions:A. Why is it important to have a base year when trying to calculate inflation rates?B. Explain why it is important to not use items related to technology that could become out dated?C. What do some economists only use "core" products when calculating the CPI?D. Explain why the base year percentage is always 100% and what figures above 100 or below 100 indicate.

 

5) In 1999 the cost of a pack of gum was $1.00. That same pack of gum is now $2.00. In 1999 the cost of a college textbook was $100.00. That same textbook is now $101.00.Use these two products as an example to explain why it is important to calculate percentages instead of absolute numbers when discussing inflation rates.

 

 

Subject Business
Due By (Pacific Time) 10/18/2012 08:00 am
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