A. Explain what is meant by deflation
B. Explain the main causes of deflation.
C. Differentiate between nominal inflation and real inflation.
D. Use the information below to calculate the country’s real GDP in 2020 if the country has a hypothetical nominal GDP of $700 million. (Show all workings)
Production Price per unit
in units (‘000) ($$$)
2022 2023 2022 2023
Cars 15 18 12 500 17 000
Food 100 250 8.5 7.5
Condos 5 10 1 000 1 500
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Understanding Deflation
A. What is Deflation?
Deflation is an economic phenomenon characterized by a sustained decrease in the general price level of goods and services in an economy over a period of time. It is the opposite of inflation, where prices rise, and instead reflects a decrease in the overall demand for goods and services.
B. Causes of Deflation
Deflation can be caused by various factors, and here are some of the main causes:
Decreased Consumer Spending: When consumers become more cautious with their spending habits, demand for goods and services decreases. This leads to a decrease in prices as businesses try to attract customers.
Technological Advancements: Technological advancements can lead to increased productivity and efficiency, resulting in lower production costs. This can cause a decrease in prices as businesses pass on the cost savings to consumers.
Decreased Money Supply: A decrease in the money supply can lead to deflation. When there is less money available in the economy, consumers have less money to spend, reducing overall demand.
Decreased Government Spending: Reductions in government spending can also contribute to deflation. If the government cuts back on its expenditures, it can lead to a decrease in aggregate demand and subsequent price decreases.
Debt Deflation: When there is a high level of debt in an economy, and individuals or businesses struggle to repay their debts, it can lead to deflationary pressure. This is because debt repayment becomes a priority, and spending on other goods and services decreases.
C. Nominal Inflation vs. Real Inflation
Nominal inflation refers to the increase in prices of goods and services over time without adjusting for the impact of changes in purchasing power. It measures the percentage change in the current price level compared to a previous period.
On the other hand, real inflation takes into account changes in purchasing power by adjusting for the effects of inflation on the value of money. Real inflation measures the percentage change in prices after adjusting for inflation and allows for a more accurate comparison of prices over time.
To calculate real inflation, you would subtract the rate of inflation from the nominal inflation rate. For example, if nominal inflation is 5% and the rate of inflation is 2%, the real inflation rate would be 3%.
D. Calculating Real GDP
To calculate the real GDP using the given information, we need to use the formula:
Real GDP = Nominal GDP / Price Index
The Price Index is calculated by taking the weighted average of the price per unit for each category of production.
Let’s calculate the price index for each category:
Cars:
2022: (15 * 12,500) + (18 * 17,000) = 375,000 + 306,000 = 681,000
2023: (15 * 12,500) + (18 * 17,000) = 375,000 + 306,000 = 681,000
Food:
2022: (100 * 8.5) + (250 * 7.5) = 850 + 1,875 = 2,725
2023: (100 * 8.5) + (250 * 7.5) = 850 + 1,875 = 2,725
Condos:
2022: (5 * 1,000) + (10 * 1,500) = 5,000 + 15,000 = 20,000
2023: (5 * 1,000) + (10 * 1,500) = 5,000 + 15,000 = 20,000
Now, let’s calculate the price index for each year:
2022:
Cars: (681,000 / 681,000) * 100 = 100
Food: (2,725 / 2,725) * 100 = 100
Condos: (20,000 / 20,000) * 100 = 100
2023:
Cars: (681,000 / 681,000) * 100 = 100
Food: (2,725 / 2,725) * 100 = 100
Condos: (20,000 / 20,000) * 100 = 100
Finally, let’s calculate the real GDP for 2020:
Real GDP = (Nominal GDP / Price Index) * 100
Real GDP = ($700 million / (100/100)) * 100
Real GDP = $700 million
Therefore, the country’s real GDP in 2020 would be $700 million based on the given information.
In conclusion, deflation refers to a sustained decrease in the general price level of goods and services. It can be caused by factors such as decreased consumer spending, technological advancements, decreased money supply, decreased government spending, and debt deflation. Nominal inflation and real inflation differ in terms of whether they adjust for changes in purchasing power. Calculating real GDP requires considering the price index and using the formula mentioned above.
