Question

3. In this economy, only bread, butter, milk, and bags are produced. Year 2015 2016 2017 2018 Price Bread $5.00 $5.50 $6.00 $6.50 Quantity Price Bread Butter 110 $1.10 100 $1.00 105 $0.95 115 $1.00 Quantity Price Butter Milk 265 $2.25 240 $2.30 250 $2.45 275 $2.50 Quantity Milk 165 155 160 180 Price Quantity Bag Bag $1.50 1,100 $1.60 1,000 $1.70 1,150 $1.75 1,250 Calculate the following values (the compass submission link will ask you for specific values from the table). 2016 is the base year Nominal GDP Real GDP GDP Deflator GDP inflation x Year 2015 2016 2017 2018

Answer 1

Nominal GDP in a given year = Price(Bread in the given year) * Qty(Bread in the given year) + Price(Butter in the given year) * Qty(Butter in the given year) + Price(Milk in the given year) * Qty(Milk in the given year) + Price(Bag in the given year) * Qty(Bags in the given year)

Real GDP in a given year = Price(Bread in the base year) * Qty(Bread in the given year) + Price(Butter in the base year) * Qty(Butter in the given year) + Price(Milk in the base year) * Qty(Milk in the given year) + Price(Bag in the base year) * Qty(Bags in the given year)

GDP Deflator = (Nominal GDP/Real GDP) * 100

GDP Inflation between consecutive years X & Y = [(GDP Deflator in year Y - GDP Deflator in year X)/GDP Deflator in year X] * 100

Given,

Base year = 2016

Year	Price of Bread	Quantity of Bread	Price of Butter	Quantity of Butter	Price of Milk	Quantity of Milk	Price of Bags	Quantity of Bags	Nominal GDP	Real GDP	GDP Deflator	GDP Inflation
2015	5.00	110	1.10	265	2.25	165	1.50	1100	2862.75	3009.5	95.12	x
2016	5.50	100	1.00	240	2.30	155	1.60	1000	2746.50	2746.5	100.00	5.13
2017	6.00	105	0.95	250	2.45	160	1.70	1150	3214.50	3035.5	105.90	5.90
2018	6.50	115	1.00	275	2.50	180	1.75	1250	3660.00	3321.5	110.19	4.06

Excel formuale for reference:

J87 B с D E F G H K M 72 1 1 Price of Quantity Price of Quantity Price of Quantity Price of Quantity 73 Bread of Bread Butter of Butter Milk of Milk Bags of Bags Nominal GDP Real GDP GDP Deflator GDP Inflation 74 5 110 1.1 265 2.25 165 1.5 1100 =B74*C74+D74*E74+F74*G74+H74*174 =$B$75*C74+$D$75*E74+$F$75*G74+$H$75*174 =(J74/K74)*100 x 75 5.5 100 240 2.3 155 1.6 1000 =B75*C75+D75*E75+F75*G75+H75*175 =$B$75*C75+$D$75*E75+$F$75*G75+$H$75*175 =(J75/K75)*100 =(L75-L74)/L74*100 76 6 105 0.95 250 2.45 160 1.7 1150 =B76*C76+D76*E76+F76*G76+H76*176 =$B$75*C76+$D$75*E76+$F$75*G76+$H$75*176 =(J76/K76)*100 =(L76-L75)/L75*100 77 6.5 115 275 2.5 180 1.75 1250 =B77*C77+D77*E77+F77*G77+H77*177 =$B$75*C77+$D$75*E77+$F$75*G77+$H$75*177 =(J77/K77)*100 =(L77-L76)/L76*100 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94