Question

Consider the table.

	Shirts		Pants
Year	Price	Quantity	Price	Quantity
2013	$7.50	750	$12.50	4000
2014	$12.00	600	$18.50	3500

The table contains prices and output for a two good economy. Nominal and real GDP in 2013 are both $55,625. Use the information in the table to answer the questions.

What is nominal GDP in 2014?

$

What is real GDP in 2014? Use 2013 as the base year.

$

Real output from 2013 to 2014 has

stayed the same.

decreased.

increased.

experienced inflation.

Consider the information about the economy of Pakistan. Note that the currency of Pakistan is the rupee. The government purchases: 2.80 trillions of rupees. Individuals consume: 11.10 trillions of rupees. Individuals save: 5.55 trillions of rupees. Businesses invest: 1.45 trillions of rupees. Foreigners spend: 0.70 trillions of Rupees to purchase Pakistani firms. Pakistan imports: 2.27 trillions of rupees. Pakistan exports: 1.26 trillions of rupees. Calculate Pakistan's GDP. Assume that the values are all current and no conversions need to be made. Give your answer in terms of trillions of rupees, and round to two decimals. Pakistan's GDP: trillions of rupees

Answer 1

1)

Nominal GDP in 2014 = current year quantity*current year price

= 12*600+18.5*3500

= 7200+64750

= 71950

Real GDP in 2014 = current year quantity*base year price

= 7.5*600+12.5*3500

= 4500+43750

= 48250

Real output from 2013 to 2014 has decreased

As per HOMEWORKLIB RULES, only the first question can be answered