4) The following table shows information on prices and outputs for a simple two-
ID: 1103980 • Letter: 4
Question
4)
The following table shows information on prices and outputs for a simple two-good economy for 2015 and 2016.
2015
2016
Price of Apples
$1.00
$2.00
Quantity of Apples
10
60
Price of Oranges
$1.00
$4.00
Quantity of Oranges
10
20
Based on the information in the table and using 2002 as the base year, calculate the values for
a) nominal GDP in 2016
b) real GDP in 2016
c) the GDP deflator in 2016
d) the CPI in 2016
No decimal points are needed and do not include $ signs. Report your answers for c and d as if the base year is 2015 and base year values are 100.
(4pts)
a.
b.
c.
d.
2015
2016
Price of Apples
$1.00
$2.00
Quantity of Apples
10
60
Price of Oranges
$1.00
$4.00
Quantity of Oranges
10
20
Explanation / Answer
Nominal GDP of 2016= 2*60+4*20 =200
Real GDP of 2016= 1*60+1*20=80
GDP deflator 2016= nominal gdp2016/ real gdp 2016 *100 =200/80*100=250
Cost of basket of 2016 basket in 2015 is 60*1+20*1=80
Cost of basket of 2016 in 2016 Is 2*60+4*20=200
CPI in 2016 = cost of basket in 2016/ cost of same basket in 2015 * 100
CPI in 2016= 250
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