Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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My question is (d), how to calculate the real GDP based on normal? The solution given just directly tells me the real GDP without any derivation.
Maybe u will use the answer from previous question, I upload them all for reference.
Thank u :)
Transcribed Image Text:***
**QUESTION - 6 -
The country of Warwickia produces and consumes three products: Computers, T-shirts and Pizza.
The table provided gives information on the prices and production of these three goods for the
years 2005, 2006, and 2007. (As a suggestion, it is recommended to use an Excel spreadsheet for
any calculations needed)
2006 $1000
2007
$1050
Computers
Years. Prices Quantity Prices Quantity Prices
2005 $900
10
$10
100
$15
10.5
$12
105
$16
12
$14
110
$17
(10.5-10)
10
Computers: 5.0% (equal to
- T-shirts: 5.0% (equal to
(105-100)
100
- Pizza: 0% (equal to (²-2) × 100)
T-shirts
a) What is the per cent change in production of each of the goods from 2005 to 2006, 2006 to
2007?
- From 2005 to 2006, the per cent change in the production of
x 100)
x 100)
Computers: 5.0% (equal to
- T-shirts: 16.7% (equal to
- Pizza: 6.25% (equal to
- From 2006 to 2007, the per cent change in the production of
Computers: 14.3% (equal to
12-10.5
10.5
x 100)
- T-shirts: 4.8% (equal to 110-105 x 100)
105
- Pizza: 50.0% (equal to ³-² × 100)
($1,000-$900)
$900
Computers: 11.1% (equal to
- T-shirts: 20.0% (equal to ($12-$10) x 100)
$10
- Pizza: 6.7% (equal to
($16-$15)
$15
x 100)
- From 2006 to 2007, the per cent change in the price of
($1,050-$1,000)
$1,000
x 100)
x 100)
b) What is the per cent change in prices of each of the goods from 2005 to 2006, 2006 to 2007?
- From 2005 to 2006, the per cent change in the price of
($14-$12)
$12
($17-$16)
$16
Pizza
x 100)
12
Quantity
2
2
3
x 100)
Transcribed Image Text:c) Calculate the nominal GDP for each year? What is the percentage change in nominal GDP
from 2005 to 2006 and from 2006 to 2007?
Year
2005
2006
2007
Nominal GDP Nominal GDP Rate of Change
$10,030
$11,792
$14,191
y
Year
2005
2006
2007
17.6%
20.3%
d) Calculate the real GDP using 2005 prices for each of the three years. What is the percentage
change in real GDP from 2005 to 2006 and from 2006 to 2007?
Real GDP Real GDP Rate of Change
$10,030
$10,530 ?
$11,945
5%
13.4%
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