Question

By what percentage did real GDP change in​ 2017?

An economy produces only two final goods: fish and berries. The table shows the quantities produced and the prices of these final goods in 2016 and 2017. Price The base year is 2016. In 2016 Item Fish Berries Quantity 100 50 $2 $6 By what percentage did real GDP change in 2017? In 2017, real GDP changed by percent. >>> Answer to 1 decimal place. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. In 2017 Item Fish Berries Quantity 75 65 Price $6 $8 Enter your answer in the answer box.

Answer 1

Answer : Here 2016 is the base year. So,

In 2016 :

Real GDP = [(Current year quantity * Base year price) / (Base year quantity * Base year price)] * 100

=> Real GDP = [{(100 * 2) + (50 * 6} / {(100 * 2) + (50 * 6)}] * 100

=> Real GDP = 100

In 2017 :

Real GDP = [(Current year quantity * Base year price) / (Base year quantity * Base year price)] * 100

=> Real GDP = [{(75 * 2) + (65 * 6)} / {(100 * 2) + (50 * 6)}] * 100

=> Real GDP = [(150 + 390) / (200 + 300)] * 100 = [540 / 500] * 100

=> Real GDP = 108

% changes in real GDP for 2017 = [(Real GDP of 2017 - Real GDP of 2016) / Real GDP of 2016] * 100

=> % changes in real GDP for 2017 = [(108 - 100) / 100] * 100

=> % changes in real GDP for 2017 = 8%

Therefore, here in 2017 the real GDP is changed by 8% .