Assume the economy produces cookies and smartphones. The table below presents price (P) and quantity (Q) of both products. (round to the nearest 2 decimal points. show all work) 2019 (base) 2020 2021 P Q Q Cookies $1 700 $1.5 1000 $3 1100 Smartphones $900 200 $950 220 $1100 300 (a) Find nominal GDP in 2020 (b) Find nominal GDP in 2021 (c) Find real GDP in 2020 (d) Find real GDP in 2021 (e) Did the price level go up or down from 2020 to 2021? Find the inflation rate.
Assume the economy produces cookies and smartphones. The table below presents price (P) and quantity (Q) of both products. (round to the nearest 2 decimal points. show all work) 2019 (base) 2020 2021 P Q Q Cookies $1 700 $1.5 1000 $3 1100 Smartphones $900 200 $950 220 $1100 300 (a) Find nominal GDP in 2020 (b) Find nominal GDP in 2021 (c) Find real GDP in 2020 (d) Find real GDP in 2021 (e) Did the price level go up or down from 2020 to 2021? Find the inflation rate.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Assume the economy produces cookies and smartphones. The table below presents price (P) and
quantity (Q) of both products. (round to the nearest 2 decimal points. show all work)
2019 (base)
2020
2021
Q
P
Q
Cookies
$1
700
$1.5
1000
$3
1100
Smartphones
$900
200
$950
220
$1100
300
(a) Find nominal GDP in 2020
(b) Find nominal GDP in 2021
(c) Find real GDP in 2020
(d) Find real GDP in 2021
(e) Did the price level go up or down from 2020 to 2021? Find the inflation rate.
P.
Expert Solution
Step 1
Since multiple subparts have been given, the first three would be answered by us. For the answers of the remaining subparts, please post the complete question and mention the subparts to be solved.
a) Nominal GDP in 2020
It is based on prices of 2020 ie current prices
= Prices in 2020*quantity in 2020
= $1.5*1000+950*220
= $1500+209000
= $210500
Hence nominal GDP in 2020 is $210500
b) Nominal GDP in 2021
= Prices in 2021* quantity in 2021
= 3*1100+1100*300
= $333300
Hence nominal GDP in 2021 is $333300
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