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) Yea Quantity of Price of Quantity of Food 200, Price of Clothing r Food Clothing 20 $15 15 $5 200 0, 7 $18 30 $6 Calculate: (i) nominal and real GDP in 2006 and 2007, (ii) the GDP deflator (iii) the growth rate in real output.
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) Yea Quantity of Price of Quantity of Food 200, Price of Clothing r Food Clothing 20 $15 15 $5 200 0, 7 $18 30 $6 Calculate: (i) nominal and real GDP in 2006 and 2007, (ii) the GDP deflator (iii) the growth rate in real output.
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter23: Measuring A Nation's Income
Section: Chapter Questions
Problem 4PA
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Transcribed Image Text: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)
Price of
Yea Quantity of Price of Quantity of
Food
r
Food
Clothing
Clothing
200,
20
6.
$15
15
$5
200,
0,
7
$18
30
$6
Calculate:
(i) nominal and real GDP in 2006 and 2007,
(ii) the GDP deflator
(iii) the growth rate in real output.
Expert Solution
Step 1
Gross domestic production (GDP) refers to the all final goods and services the produced with in the country during the period of time.
Step 2
Nominal GDP in year 2006 can be calculated as follows.
Nominal GDP in year 2006 is $375.
Nominal GDP in year 2007 can be calculated as follows.
Nominal GDP in year 2007 is $1,260.
Real GDP in year 2006 can be calculated as follows.
Real GDP in year 2006 is $375.
Real GDP in year 2007 can be calculated as follows.
Real GDP in year 2007 is $1,050.
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