Question1- Suppose that Saudi Arabia produces the goods: Books, Pizza and Bags.
ID: 1107186 • Letter: Q
Question
Question1-
Suppose that Saudi Arabia produces the goods: Books, Pizza and
Bags. The following table provides information about the prices and output for these
Three goods for the years 2012, 2013 and 2014.
Year
Price per Book
Quantity of Books
Price per Pizza
Quantity of Pizza
Price of Bag
Quantity of Bags
2012
$100
10
$50
100
$10
200
2013
$100
12
$52
108
$10
205
2014
$110
12
$54
115
$10
212
(A). Using above information, calculate nominal GDP for 2012, 2013 &2014.
(B) Calculate real GDP of 2012, 2013 &2014 using 2012 as a base year.
(C). Measure GDP deflator on a 100-point scale with 2012 as the base year
Question2
The U.S. real GDP per person grew rapidly in the early 1960s. The table above has U.S. real GDP and population for 1961 and 1962.
a. What was U.S. real GDP per person in 1961?
b. What was U.S. real GDP per person in 1962?
c. Between 1961 and 1962, how rapidly did U.S. real GDP per person grow?
Year
Price per Book
Quantity of Books
Price per Pizza
Quantity of Pizza
Price of Bag
Quantity of Bags
2012
$100
10
$50
100
$10
200
2013
$100
12
$52
108
$10
205
2014
$110
12
$54
115
$10
212
Real GDP Population billions of 2005 dollars) (millions of people) Year 1961 1962 2,432 2,578 184 186Explanation / Answer
(Question 1)
(A) Nominal GDP = Sum of (Current year Price x Current year Quantity)
2012 ($): 100 x 10 + 50 x 100 + 10 x 200 = 1,000 + 5,000 + 2,000 = 8,000
2013 ($): 100 x 12 + 52 x 108 + 10 x 205 = 1,200 + 5,616 + 2,050 = 8,866
2014 ($): 110 x 12 + 54 x 115 + 10 x 212 = 1,320 + 6,210 + 2,120 = 9,650
(B) Real GDP = Sum of (Base year (2012) Price x Current year Quantity)
2012 ($): 100 x 10 + 50 x 100 + 10 x 200 = 1,000 + 5,000 + 2,000 = 8,000
2013 ($): 100 x 12 + 50 x 108 + 10 x 205 = 1,200 + 5,400 + 2,050 = 8,650
2014 ($): 100 x 12 + 50 x 115 + 10 x 212 = 1,200 + 5,750 + 2,120 = 9,070
(C) GDP Deflator = (Nominal GDP / Real GDP) x 100
2012: ($8,000 / $8,000) x 100 = 100
2013: ($8,866 / $8,650) x 100 = 102.50
2014: ($9,650 / $9,070) x 100 = 106.39
NOTE: First question is answered.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.