1- Consider the following economy: Prices and Quantities Year Price Good 1 Quant
ID: 1169698 • Letter: 1
Question
1- Consider the following economy:
Prices and Quantities
Year
Price Good 1
Quantity
Price Good 2
Q2 (1000)
2010
$3
105
$4
50
2011
$4
115
$5
65
2012
$4.50
120
$7
60
2013
$6.50
125
$8
70
Calculate the Nominal GDP for each year
Calculate the real GDP for each year using 2010 as the base year.
Calculate the GDP deflator for each year.
Year
Nominal GDP
Real GDP
GDP Deflator
2010
2011
2012
2013
2- Calculate the GDP
3- What is the GDP deflator if real GDP = 3450?
Items
Nominal
Real
Personal Consumption expenditures
C
$4000
Gross Private domestic Investments
I
$1500
Gov. Purchases of goods and services
G
$1000
Exports
X
$1000
Imports
M
Net Exports
NX
-2500
Note that NX = net exports= exports - imports
Prices and Quantities
Year
Price Good 1
Quantity
Price Good 2
Q2 (1000)
2010
$3
105
$4
50
2011
$4
115
$5
65
2012
$4.50
120
$7
60
2013
$6.50
125
$8
70
Explanation / Answer
Year Nominal GDP Real GDP GDP Deflator 2010 515000 515000 Nil 2011 785000 605000 129.75 2012 960000 600000 160.00 2013 1372500 655000 209.54 Items Amount Consumption 4000 Investment 1500 Government Spending 1000 Net Exports -2500 Nominal GDP 4000 Real GDP 3450 Deflator 115.94
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