# Project 2

Topics: Inflation, Gross domestic product, Consumer price index Pages: 2 (471 words) Published: June 11, 2012
Autumn L. Biniecki
Spring Session B
ABiniecki88@yahoo.com

Chapter 15, Question 11
The table below lists gross domestic product (GDP), consumption (C), gross private domestic investment (I), government spending (G), and net exports (X-M). Computer each as a percent of GDP for the 5 years presented. C (%) = (C/GDP) x 100%

I (%) = (I/GDP) x 100%

G (%) = (G/GDP) x 100%

X –M (%) = ((X-M)/GDP) x 100%

YEAR |GDP |C |I |G |X-M |C(%) |I(%) |G(%) |X-M(%) | |1965 |719.1 |443.8 |118.2 |151.5 |5.6 |61.72 |16.44 |21.07 |0.78 | | | | | | | | | | | | |1975 |1638.3 |1034.4 |230.2 |357.7 |16 |63.14 |14.05 |21.83 |0.97 | | | | | | | | | | | | |1985 |4220.3 |2720.3 |736.2 |879 |-115.2 |64.46 |17.44 |20.83 |-2.73 | | | | | | | | | | | | |1995 |7397.7 |4975.8 |1144 |1369.2 |-91.4 |67.26 |15.46 |18.51 |-1.23 | | | | | | | | | | | | |2005 |12455.8 |8742.4 |2057.4 |2372.8 |-716.4 |70.19 |16.52 |19.05 |-5.75 | |a) From comparing the differences in the table above I or Gross Private Domestic Investment component of GDP is the most stable considering steady positive growth, with looking for the smallest change from the year with the smallest contribution to GDP to the year with the largest contribution. b) Net exports presented in the table as X-M is the most volatile as a percent of GDP. c) Ignoring net exports, the consumption component of GDP has grown the fastest as a percent of GDP since 1965

Chapter 16, Question 6
Explain why hyperinflation has such a devastating impact on economies. Explain what it takes to stop hyperinflation. “Hyperinflation is an extremely high rate of inflation. At first, hyperinflation was defined as an inflation rate of at least 50% a month. Today, most economists refer to inflation about 100% a year as hyperinflation.” Hyperinflation causes the middle class to become obsolete. This causes the value of cash, savings, bonds and other paper instruments...

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