low Help ?? 8 Pri.... Saved to my Mac ert Design Layout References Mailings Revi
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low Help ?? 8 Pri.... Saved to my Mac ert Design Layout References Mailings Review View Calibri 12A- A Styles Styles Consider the following table for the economy of a nation whose resident produce five goods 1997 2015 Good Price Quantity Price Quantity 20 10 $2 Soap DVD Players $200 Pants Cereal 15 10 $40 $3 $1 $250 $50 $4 $2 10 40 20 Please note: Explanations on how to complete #2 are found on page 2 of this document. 1. What is the actual (nominal) GDP for each of the years? Hint: Remember the GDP is the total value of all final goods and services produced in a nation in a year. Calculate price x quantity for each product and add them up for each year. Show your work Assuming 1997 is the base year, determine the real GDP for 2015. Hint: The basket of goods must be identical so use the quantities found in the 1997 basket and apply the 2015 prices to them as part of your calculation. Show your work 2. Focus 2 363 words English (United States)Explanation / Answer
Answer 1:
Actual GDP is the value of the goods and services based on the current year prices.
Actual GDP of 1997:
15 soaps * $2 + 10 DVD players * $200 + 5 pants * $40 + 10 cereal * $3 + 40 candy * $1
$30 + $2000 + $200 + $30 + $40
$2300
Actual GDP of 2015
20 soaps * $4 + 10 DVD players * $250 + 4 pants * $50 + 3 cereal * $4 + 20 candy * $2
$80 + $2500 + $200 + $12 + $40
$2832
Answer 2:
Real GDP of 2015 based on 1997 prices.
Value of 1997 basket based on 2015 prices = 15 soaps * $4 + 10 DVD players * $250 + 5 pants * $50 + 10 cereal * $4 + 40 candy * $2 = $60 + $2500 + $250 + $40 + $80 = $2930
Price Index = Value of 1997 basket based on 2015 prices / Actual GDP of 1997 * 100 = (2930/2300)*100 = 127
Real GDP of 2015 = Actual GDP of 2015/Price Index *100 = (2832/127)*100 = $2230
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