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ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Need help solving question 3.
DIRECTIONS Each section below contains problems associated with a particular aspect of GDP. Use your knowledge of GDP to answer each question. You may use a calculator if needed. NOMINAL GDP AND REAL GDP 1) The following tables list GDP data for a fictional economy in two different years. Pretend this economy only produces these three items. What is the nominal GDP each year? Year 1 (Nominal GDP) Year 2 (Nominal GDP) Good Price Quantity GDP Cookies $2 50 Good Price Quantity GDP Doughnuts $5 35 Cookies $3 45 Cake $10 15 Doughnuts $7 40 TOTAL Cake $1 25 TOTAL 2) Now calculate the real GDP for Year 2 using Year 1 as the base year. This means to use the Year 1 prices with the Year 2 quantities. Use the table to the right to fill in your calculations. Year 2 (Real GDP) Good Price Quantity Real GDP Cookies 45 Doughnuts 40 3) How much did nominal GDP for Year 2 overstate the growth in this economy? (i.e. How much larger was Year 2 nominal GDP than Year 2 real GDP?) Cake 25 TOTAL GDP PER CAPITA 4) Circle the country you would expect to have a higher GDP per capita based on its location. a) Kenya Germany b) China United States c) Australia Brazil d) Argentina Nigeria e) India Spain
Transcribed Image Text:DIRECTIONS Each section below contains problems associated with a particular aspect of GDP. Use your knowledge of GDP to answer each question. You may use a calculator if needed. NOMINAL GDP AND REAL GDP 1) The following tables list GDP data for a fictional economy in two different years. Pretend this economy only produces these three items. What is the nominal GDP each year? Year 1 (Nominal GDP) Year 2 (Nominal GDP) Good Price Quantity GDP Cookies $2 50 Good Price Quantity GDP Doughnuts $5 35 Cookies $3 45 Cake $10 15 Doughnuts $7 40 TOTAL Cake $1 25 TOTAL 2) Now calculate the real GDP for Year 2 using Year 1 as the base year. This means to use the Year 1 prices with the Year 2 quantities. Use the table to the right to fill in your calculations. Year 2 (Real GDP) Good Price Quantity Real GDP Cookies 45 Doughnuts 40 3) How much did nominal GDP for Year 2 overstate the growth in this economy? (i.e. How much larger was Year 2 nominal GDP than Year 2 real GDP?) Cake 25 TOTAL GDP PER CAPITA 4) Circle the country you would expect to have a higher GDP per capita based on its location. a) Kenya Germany b) China United States c) Australia Brazil d) Argentina Nigeria e) India Spain
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