___(nominal or real)______GDP is the total value of production (final goods and
ID: 1107487 • Letter: #
Question
___(nominal or real)______GDP is the total value of production (final goods and services) using current prices.
Consider an illustrative economy that produces luxury pens. Assume that in
2012 this economy produced 30 luxury pens at a market price of $300 per pen. In 2013, the number of luxury pens produced remains the same but the market price has increased to $400 per pen. If 2012 is the base year, the real GDP in 2013 is $______. The nominal GDP in 2013 has ___(increased ir decreased)_____by ______percent from what it was the year before (Round your answer to two decimal places.)
Which of the following statements are true regarding the quantity theory of money?
(Check
all that
apply.)
A.
Growth rate of money
supplyequals=Growth
rate of nominal GDP.
B.
Growth rate of money
supplyequals=Growth
rate of nominal
GDPminusInflation
rate.
C.
Growth rate of money
supplyequals=Growth
rate of real GDP.
D.
Growth rate of money
supplyequals=Inflation
rateplus+Growth
rate of real GDP.
Explanation / Answer
a. Nominal GDP
It measures the market value of all final goods and services produced within an economy during a given period of time.
b. Real GDP = Price2012 * Quantity2013
RGDP = 30 * 300 = $9000.
c. Nominal GDP = Price * quantity
NGDP in 2012 = 30*300 = $9000
NGDP in 2013 = 400 * 30 = $12000.
The nominal GDP has increased by 33.33%
d. Option D
Growth rate of money supply + growth rate of velocity = growth rate of price level + growth rate of output.
growth rate of velocity is constant.
% of M = % of P + % of Y.
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