Answer:
The GDP price index for the economy in year 2 is 110.
Explanation:
It is given that the total expenditures for a market basket of goods in year 1 (the base year) were $5,000 billion.
Price of market basket in base year = $5000
In year 2, the total expenditure for the same market basket of goods was $5,500 billion.
Price of market basket in specific year = $5500
GDP price index:
[tex]\text{GDP price index}=\frac{\text{Price of market basket in specific year}}{\text{Price of market basket in base year}}\times 100[/tex]
[tex]\text{GDP price index}=\frac{5500}{5000}\times 100[/tex]
[tex]\text{GDP price index}=110[/tex]
Therefore the GDP price index for the economy in year 2 is 110.
