Question

A and B

Question 1.2 points. The following table reports data for a fictional economy that produces only 3 goods. For example, according to the table, in 2009, this economy produced 10 units of Good A, 15 units of Good B, and 5 units of Good C. The price of Good A in 2009 and 2010 was s0.30, in 2011 it increased to S0.35, and it increased again in 2012 to $0.37. Good A Good B Good C Price Quantity Price Quantity Price Quantity S0.30 2009 12 12 13 S0.3714 $2.50 $2.75 15 15 16 16 $102.00 $102.50 5 201 S0.30 2012 0.35 $0.37$2.75 $2.80S103.00 10$104.00 A) Calculate nominal GDP in 2009, 2010, 2011, and 2012. Show your work. B) Assuming 2009 is the base year, calculate real GDP in 2009, 2010, 2011, and 2012. Show your work.

Answer 1

A ) Ans:

Nominal GDP = current year price * current year quantity

For Year 2009 ,  Nominal GDP = ( $0.30 * 12 ) + ( $2.50 * 15 ) + ( $102.00 * 5 )

= $3.60 + $37.50 + $510 = $551.10

For Year 2010 ,  Nominal GDP = ( $0.30 * 12 ) + ( $2.75 * 15 ) + ( $102.50 * 5 )

= $3.60 + $ 41.25 + $512.50 = $557.35

For Year 2011 ,  Nominal GDP = ( $0.35 * 13 ) + ( $2.75 * 16 ) + ( $103.00 * 8 )

= $ 4.55 + $ 44 + $ 824 = $872.55

For Year 2012 ,  Nominal GDP = ( $0.37 * 14 ) + ( $2.80 * 16 ) + ( $104.00 * 9 )

= $5.18 + $44.80 + $936 = $985.98

B ) Ans:

Real GDP = base year price * current year quantity

For 2009 , Real GDP = ( $0.30 * 12 ) + ( $2.50 * 15 ) + ( $102.00 * 5 )

= $3.60 + $37.50 + $510 = $551.10

For 2010 , Real GDP = ( $0.30 * 12 ) + ( $2.50 * 15 ) + ( $102.00 * 5 )

= $3.60 + $37.50 + $510 = $551.10

For 2011 , Real GDP = ( $0.30 * 13 ) + ( $2.50 * 16 ) + ( $102.00 * 8)

= $3.90+ $40 + $816 = $859.90

For 2012 , Real GDP = ( $0.30 * 14 ) + ( $2.50 * 16 ) + ( $102.00 * 9 )

= $4.20 + $40 + $918 = $962.20