Question

Price Year 2018 $4 Quantity Year 2018 100 Price Year 2019 Quantity Year 2019 75 | 2019 food $5 tents $100 15 $10517 17 Show your mathematical work! (a) nominal GDP for 2018 = EP * O In the formula to the left. Identify which year's P's & which I's (b) real GDP for 2018 using base year 2019 = P__* _ Identify which year's P's and which Q's in the formula (c) real GDP for 2019 using base year 2019 = ? P_* Q_ Identify which year's P's and which Q's in the formula (d) the growth rate in GDP from 2018-19 using base year 2019 round to 0.00 After multiplying by 100

Answer 1

Solution:-

(A). Nominal GDP in 2018:-

Nominal GDP for 2018 = Current Year Price * Current Year Quantity

                                     = (4 * 100) + (100 * 15)

                                   = 400 + 1500

                                     = 1900

(B). Real GDP for 2018 using base year 2019:-

Real GDP in 2018 = Base Year Price * Current Year Quantity

                              = (5 * 100) + (105 * 15)

                              = 500 + 1575

                              = 2075

(C). Real GDP for 2019 using base year 2019:-

Real GDP in 2018 = Base Year Price * Current Year Quantity

                              = (5 * 75) + (105 * 17)

                              = 375 + 1785

                              = 2160

(D). Growth Rate in GDP from 2018 to 2019:-

Growth rate of real GDP from 2018 -19 = (Real GDP 2019   - Real GDP 2018) / ( Real GDP 2018)  

= (2160 - 2075) / 2075

= 0.04096 * 100

= 4.1%