Can anyone help me on this Macroeconomics Homework?

[Madcowz]

LINK

For #3, someone told me to use this equation to fill in the charts:

Nominal / Real = Deflator

Well I did, but my numbers are coming out weird. For the US, the nominal GDP is higher than REAL, and yet there is deflation every year, and for Japan Real GDP is higher than nominal although they experience inflation... shouldn't this be the other way around? Perhaps the equation I'm using is wrong?


Also, can someone help me with 4? I guess I was snoozing in class when they were teaching the aggregate expenditure model

Thanks!

 

[gopunk]

Well I did, but my numbers are coming out weird. For the US, the nominal GDP is higher than REAL, and yet there is deflation every year, and for Japan Real GDP is higher than nominal although they experience inflation... shouldn't this be the other way around? Perhaps the equation I'm using is wrong?

not sure what you mean... gdp deflator measures price levels. a higher gdp deflator means that nominal gdp is greater than real gdp, or that inflation is up.

it looks like japan is exp. deflation and u.s. is exp. inflation.

 

[Madcowz]

hmm, okay than I guess I've been going at this whole thing wrong. I thought you take the deflator and subtract it from 1 and you get the inflation rate, which would make Japan experiencing inflation, and US deflation... so how DO I calculate inflation with the given material?

 

[gopunk]

<< hmm, okay than I guess I've been going at this whole thing wrong. I thought you take the deflator and subtract it from 1 and you get the inflation rate, which would make Japan experiencing inflation, and US deflation... so how DO I calculate inflation with the given material? >>



inflation for year 2 = [(prices for year 2 - prices for year 1) / prices for year 1] x 100

 

[Daishiki]

ah, macro. the days of hs last year. glad it's over. now i just worry about cs...

 

[b0mbrman]

<< Using the open economy version of the aggregate expenditure model, explain how each event below could be expected to affect the U. S. economy. Be sure to show which component of expenditure would change, how the expenditure curve would shift and what effect the shift would have on equilibrium income.
a. A large tax cut.
b. A downturn in the Japanese economy, a major export market for the U.S.
c. A fall in consumer confidence (that is, people start spending less given their income).
d. A rapidly strengthening dollar. >>


a. Consumers have more spendable cash => Consumer spending increases => Aggregate Expenditures increase (shift right)
b. Japanese demand less US goods => US net exports decrease => Ag. Exp. decreases (shifts left)
c. Consumers spend less => Ag. Exp. decreases
d. Our prices look worse to foreigners and foreign prices look worse to us => Net Exports decrease => Ag. Exp decreases

 

[gopunk]

d. Our prices look worse to foreigners and foreign prices look worse to us => Net Exports decrease => Ag. Exp decreases

not sure if this is a typo, but foreign prices look better to us... imports increase, exports decrease, net exports decrease.

 

[b0mbrman]

<< d. Our prices look worse to foreigners and foreign prices look worse to us => Net Exports decrease => Ag. Exp decreases

not sure if this is a typo, but foreign prices look better to us... imports increase, exports decrease, net exports decrease. >>


Ah you're right...