Question

The fictional small country of Qbert has had a robust GDP the last few years. Dansbert produces just two products; Water Bottles and Bikes. The following chart shows product quantities and prices from 2016 to 2018. With 2016 as the base year calculate the real GDP using 2018 prices. What is the real yearly growth of 2017 & 2018? Water Bottles Bikes Quantity Price/unit Quantity Price/unit Year 2016 (base year)1 million $3 Year 2017 Year 2018 2.5 million $4 3 million$ 2 million $10 2.5 million $12 2.75 mllion $17 O 41.3% for 2017:58.7% for 2018 O 23.1% for 2017; 69.2% for 2018 O 73.9% for 2017:168.5% for 2018

Answer 1

Real GDP = (Current Year output) times (Base year Price) Base year = 2106 (Given) Real GDP (2016) Real GDP = (1) ($ 3) + (2) ($ 10) Real GDP = $ 3 + $ 20 Real GDP = $23 million. Real GDP (2017) Real GDP = (2017�s quantity) (2016�s price) Real GDP (2.5) ($ 3) + (2.5) ($ 10) Real GDP = $7.5 + $25 Real GDP = $ 32.5 million Real GDP (2018) Real GDP = (2018�s quantity) (2016�s price) Real GDP = (3) ($ 3) + (2.75) ($ 10) Real GDP = $9 + $27.5 Real GDP = $36.5 million \r\n Real GDP growth in 2017 Growth = (2017 GDP - 2016 GDP/2016 GDP) times 100 Growth = (32.5 - 23/23) times 100 Growth = (9.5/23) times 100 Growth = 41.30% Real GDP growth in 2018 Growth = (2018 GDP - 2016 GDP/2016 GDP)