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In: Economics

Learning Activity 2 GDP and its Limitations Consider the following country, Alpha, which makes two goods,...

Learning Activity 2
GDP and its Limitations
Consider the following country, Alpha, which makes two goods, Rice and Potatoes. The quantity and prices of these goods are given in the table below for the two years, 2018 and 2019:
2018 2019 Quantity Price Quantity Price Rice 12 $15 14 $17 Potatoes 20 $5 25 $10

Part 1: Use the information above to calculate the following:
1) Nominal GDP for Country Alpha for 2018 and 2019 2) Real GDP for 2018 and 2019, using 2018 as the base year 3) The Real GDP growth rate for the country from 2018 and 2019

Part 2: Suppose someone wants you to compare the standard of living of the country over 2018 and 2019. Looking at the Real GDP data, what would you tell him/her? Is the Real GDP doing a good job here as a measure of standard of living? Why or why not?

Part 3: Now suppose the population of the country was 100 people in 2018 and 120 people in 2019. Calculate the Real GDP per capita for the country for both years

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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