Suppose that in 1984 the total output in a single-good economy was 10,000 bucket

Question

Suppose that in 1984 the total output in a single-good economy was 10,000 buckets of chicken and the price of each bucket of chicken was $10. In 2005 the price per bucket of chicken was $16 and 22,000 buckets were produced.

Determine the GDP price index for 1984, using 2005 as the base year.

Instructions: Enter your response as an index number rounded to one decimal place.

GDP price index =

By what percentage did the price level, as measured by this index, rise between 1984 and 2005?  %

What were the amounts of real GDP in 1984 and 2005?

Real GDP in 1984 = $

Real GDP in 2005 = $

Explanation / Answer

GDP Price Index = 62.5; price level increased by 60%; Real GDP in 1984 = $112,000; Real GDP in 2005 = $352,000.

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