2. Consider an economy that produces only chocolate bars. In year 1, the quantit
ID: 1141820 • Letter: 2
Question
2. Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 3 bars and the price is $4. In year 2, the quantity produced is 4 bars and the price is $5. In year 3, the quantity produced is 5 bars and the price is $6. Year 1 is the base yea a. What is nominal GDP for each of these three years? b. What is real GDP for each of these years? c. What is the GDP deflator for each of these years? d. What is the percentage growth rate of real GDP from year 2 to year 3? e. What is the inflation rate as measured by the GDP deflator from year 2 to year 3? f In this one-good economy, how might you have answered parts (d) and (e) without first answering parts (b) and ()?Explanation / Answer
Formulas:
Nominal GDP=Current year price *Quantity
Real GDP=Current year quaQuant*Base year price
Deflator=(Nominal GDP/real GDP)*100
Growth in real GDP=(Real GDP in current year-Real GDP last year/Real GDP last year)*100
We solve only the first four questions if you've put up a question that has multiplie parts.
Year Quantity Price Nomina GDP Real GDP Deflator Growth in real GDP 1 3 4 12 12 100 - 2 4 5 20 16 125 33% 3 5 6 30 20 150 25%Related Questions
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