contestada

Consider a simple economy that produces two goods: pens and oranges. The following table shows the prices and quantities of the goods over a three-year period.

Pens Oranges
Price Quantity Price Quantity
2016 1 150 2 160
2017 2 135 4 230
2018 3 110 4 165

Use the information from the preceding table to prepare real GDP and nominal GDP.

Respuesta :

Answer:

Year      Nominal GDP     Real GDP

2016       470                      310

2017       1,190                     595

2018       990                      440

Explanation:

The question is to determine both the real GDP and teh nominal GDP of the economy in question for the three yeras

First, the Formula for

Nominal GDP = Price (Dollar Per Pen) x Quantity (Number of Pens) + Price (Dollars Per Orange) x Quantity (Number of Oranges)

Real GDP =1 x Quantity (Number of Pens) + 2 x Quantity (Number of Oranges)

Note for Real GDP we use the Price for Pen and Orange for 2016 as the base for all the years.

Finally, the Formula for the GDP Deflator = Nominal GDP / Real GDP

Based on these formulas, we calculate the yearly Nominal and Real GDPs

2016 =

Nominal GDP = 1 x 150 + 2 x 160 = 470

Real  GDP = 1 x 150 + 2 x 160 = 310

GDP Deflator = 470/470 x 100 = 100%

2017 = We use the price of 2016 as the base year in dollars for real GDP

Nominal GDP = 2 x 135+ 4 x 230= 1,190

Real  GDP = 1 x 135+ 2 x 230= 595

GDP Deflator = 1,190/595 x 100 = 200%

2018 = We use the price of 2016 as the base year in dollars for real GDP

Nominal GDP = 3 x 110+ 4 x 165= 990

Real  GDP = 1 x 110+ 2 x 165= 440

GDP Deflator = 990/440x 100 = 225%

The real and nominal GDP for the 3 years would be as follows:

         Real    Nominal

[tex]2016[/tex]    [tex]470[/tex]        [tex]470[/tex]

[tex]2017[/tex]    [tex]595[/tex]         [tex]1190[/tex]

[tex]2018[/tex]     [tex]440[/tex]         [tex]990[/tex]

Nominal and Real GDP

Nominal GDP is the value of goods and services produced in an economy, at current prices.

Real GDP is the value of goods and services produced in an economy, at base year prices. Base year is assumed to be 2016 in this case.

2016

Nominal GDP [tex]= Sum (Price 2016[/tex] × [tex]Quantity)[/tex], of Pen and Orange

[tex]= (1[/tex] × [tex]150) + (2[/tex] × [tex]160) = 150 + 320 = 470[/tex]

Real GDP is same i.e. [tex]= 470[/tex] in this year, as 2016 itself is the base year.

2017

Nominal GDP = Sum (Price 2017 x Quantity), of Pen and Orange [tex]= (2[/tex] × [tex]135) + (4[/tex] × [tex]230)[/tex]

[tex]= 270 + 920 = 1190[/tex]

Real GDP = Sum (Prices 2016 x Quantities 2017 )

[tex]= (1[/tex] × [tex]135) + (2[/tex] × [tex]230)[/tex]

[tex]= 135 + 460 = 595[/tex]

2018

Nominal GDP = Sum (Prices 2018 x Quantities) [tex]= (3[/tex] × [tex]110) + (4[/tex] × [tex]165)[/tex]

[tex]= 990[/tex]

Real GDP = Sum (Prices 2016 x Quantities 2018 )[tex]= (1[/tex] × [tex]110) + (2[/tex] × [tex]165)[/tex]

[tex]= 110 + 330 = 440[/tex]

For more about "Real and Nominal GDP" here:

brainly.com/question/14034620

Otras preguntas