Suppose production and prices of food and clothing (the only two goods produced in this economy) in 2006 and 2007 are as follows: (base year = 2006) Year Quantity of Food Price of Food Quantity of Clothing Price of Clothing 2006 20 $15 15 $5 2007 60 $18 30 $6 Calculate nominal and real GDP in 2006 and 2007, the GDP deflator and the
Unit 7 Practice Questions to be discussed in BBC
Students are expected to attempt the questions before attending the BBC Session.
Selected questions will be discussed in the BBC Session.
Question 1
Suppose production and prices of food and clothing (the only two goods
produced in this economy) in 2006 and 2007 are as follows: (base year = 2006)
Year Quantity
of Food
Price
of
Food
Quantity
of Clothing
Price of
Clothing
2006 20 $15 15 $5
2007 60 $18 30 $6
Calculate nominal and real GDP in 2006 and 2007, the GDP deflator and the
growth rate in real output.
Question 2
You have been employed as the chief economist for the economy UWI Land. The
head statistician has provided you with the following information:
Compensation of Employees
900
Corporate profits 400
Factor income paid to the world 325
Factor Income received from the world
170
Indirect taxes 775
Subsidies 125
Consumption of goods 850
Net interest 75
Rent Income 125
Consumption of services 475
Residential investments 350
Non-residential investments
525
Government Expenditure 925
Imports 700
Exports 300
Proprietor’s income 300
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