In year 1 and year 2, two products are produced in a given economy, bicycles and computers. suppose there are no intermediate goods. in year 1, 500 bicycles are produced and sold at $500 each, and in year 2420 bicycles are sold at $600 each. in year 1, 300 computers are sold for $800 each, and in year 2, 355 computers are sold for $850 each. calculate nominal gdp in each year. calculate real gdp in each year, and the percentage increase in real gdp from year 1 to year 2 using alternatively the first and second year as the base year. what is real gdp growth using the chain weighted method? show that real chain-weighted gdp in year 2 using year 1 as the base year is equal to $491, 470. calculate the implicit gdp price deflator and the implied percentage inflation rate using year 1 as the base year. calculate the cpi and the cpi inflation rate using the same base year. can you explain why the cpi inflation is different from the one computed from the gdp deflator? is it a systematic feature that you would expect?

Cool beans is a locally owned coffee shop that competes with two large coffee chains, planeteuro and frothies. alicia, the owner, hired two students to count the number of customers that entered each of the coffee shops to estimate what percent of people who are interested in coffee are visiting each shop. after a week, the students found the following results: 589 visited cool beans, 839 visited planeteuro, and 1,290 visited frothies. the students were surprised that cool beans had 139 visits on monday which represented 59% of all people who visited one of the three coffee shops on mondays. how many people visited one of the three coffee shops during the week?

Jackson is preparing for his hearing before the federal communications commission (fcc) involving a complaint that was filed against him by the fcc regarding the interruption of radio frequency. the order to "cease and desist" using the radio frequency has had a detrimental impact on his business. once the administrative law judge prepares his or her initial order, jackson has no further options. no, jackson can request that the matter be reviewed by an agency board or commission. yes, once the initial order is presented, it's only a matter of time before the order becomes final.

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?