Question

The table below contains data on prices and quantities for the economy of Summerville. Fill in the missing cells for nominal GDP, real GDP, the GDP deflator, and the inflation rate. Use 2010 as the base year.

Instructions: Round nominal and real GDP values to two decimal places. Round the GDP deflator and inflation rate values to the nearest whole number.

Year	Quantity of oranges	Price of orange ($)	Quantity of beach balls	Price of beach ball ($)	Nominal GDP ($)	Real GDP ($)	GDP deflator	Inflation rate (%)
2010	500	1.00	875	6.00				—
2011	800	1.50	900	7.75
2012	750	1.65	1000	8.25

Answer 1

Year	Quantity of oranges	Price of orange($)	Quantity of beach balls	Price of beach balls($)	Nominal GDP($)	Real GDP($)	GDP deflator($)	Inflation rate(%)
2010	500	1.00	875	6.00	5750	5750	100	100%
2011	800	1.50	900	7.75	8175	6200	131.85	32%
2012	750	1.65	1000	8.25	9487.50	6750	140.55	41%

Nominal GDP is the market value of all final goods and services produced within the domestic territory of a country during an accounting year, as estimated using the current year price. Nominal GDP= Q×price(current year). By current year, we mean the price prevailing in the year of manufacturing.

The Real GDP is the market value of all final goods and services produced within the domestic territory of a country during an accounting year, as estimated using the base year prices Real GDP = Q×Base year price. Base year price means the year of price chosen for comparison.

The formula for finding GDP deflator is Nominal GDP/Real GDP× 100

Inflation rate = GDP deflator (current year) –GDP deflator (base year)/GDP deflator (base year)×100