Consider an economy that produces and consumes final products: bread and automobiles. In the following table are data for two different years. Good Year Quantity Price 2000 Quantity 2010 Price 2010 Automobiles 100 Bread 2000 $50,000 500,000 $10 $60,000 $20 120 400,000 a. Compute the nominal GDP for each year. b. Compare the numbers you get for each year. If we use GDP as a measure of production capacity of an economy in a certain year, can we infer the economy is more productive in one year than the other? What is your concern when you compare the numbers directly?
Consider an economy that produces and consumes final products: bread and automobiles. In the following table are data for two different years. Good Year Quantity Price 2000 Quantity 2010 Price 2010 Automobiles 100 Bread 2000 $50,000 500,000 $10 $60,000 $20 120 400,000 a. Compute the nominal GDP for each year. b. Compare the numbers you get for each year. If we use GDP as a measure of production capacity of an economy in a certain year, can we infer the economy is more productive in one year than the other? What is your concern when you compare the numbers directly?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
Problem 6PA
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Transcribed Image Text:Consider an economy that produces and consumes final products: bread and automobiles.
In the following table are data for two different years.
Good
Year
Quantity Price
Quantity
2010
Price
2010
$60,000
$20
2000
2000
$50,000
$10
Automobiles 100
120
Bread
500,000
400,000
a. Compute the nominal GDP for each year.
b. Compare the numbers you get for each year. If we use GDP as a measure of production
capacity of an economy in a certain year, can we infer the economy is more productive
in one year than the other? What is your concern when you compare the numbers
directly?
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