Question
In: Economics
Refer to Table 10-6 below. Calculate this country's real GDP for each of the following years,...
Refer to Table 10-6 below. Calculate this country's real GDP for each of the following years, 2008, 2009, 2010 and 2011.
| Year | Price of Waffles | Quantity of Waffles | Price of Pancakes | Quantity of Pancakes |
|
2008 (Base Year) |
$2 | 100 | $1 | 100 |
| 2009 | $2 | 120 | $2 | 150 |
| 2010 | $2 | 150 | $3 | 200 |
| 2011 | $4 | 180 | $3 | 220 |
Solutions
Expert Solution
Real GDP is the value of goods and services at the prices of the base year. To calculate the real GDP of any year we multiply the quantity of the current year with base year prices.
In this question our base year is 2008 as mentioned in the question, so we will use the prices of 2008.
Real GDP of 2008 = Price of waffles * Quantity of waffles + Price of pancakes * Quantity of Pancakes
Real GDP of 2008 = $2 * 100 + $1 * 100 = $200 + $100 = $300
Real GDP of 2008 = $300
Real GDP of 2009 = Price of waffles (2008) * Quantity of waffles (2009) + Price of pancakes (2008) * Quantity of Pancakes (2009)
Real GDP of 2009 = $2 * 120 + $1 * 150 = $240 + $150 = $390
Real GDP of 2009 = $390
Real GDP of 2010 = Price of waffles (2008) * Quantity of waffles (2010) + Price of pancakes (2008) * Quantity of Pancakes (2010)
Real GDP of 2010 = $2 * 150 + $1 * 200 = $300 + $200 = $500
Real GDP of 2010 = $500
Real GDP of 2011 = Price of waffles (2008) * Quantity of waffles (2011) + Price of pancakes (2008) * Quantity of Pancakes (2011)
Real GDP of 2011 = $2 * 180 + $1 * 220 = $360 + $220 = $580
Real GDP of 2011= $580
Rahul Sunny answered 1 year agoRelated Solutions
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