Question

1. In years 1 and 2, there are 2 goods produced in a given economy, sausages and pens. In year 1, 10,000 sausages are produced and sold at $2 each, and in year 2, 20,000 sausages are produced and sold at $2.10 each. In year 1, 15,000 pens are sold for $2 dollars each and in year 2, 48,000 pens are sold for d3 eac

Answer 1

a) Nominal GDP In year - 1: = (10,000 Sausages times 2) + (15000 opens times 2) = $20,000 + 30,000 = $ 50,000 In year - 2: = (20,000 Sausages times 2.10) + (48000 pens times 3) = 42000 + 144000 = $ 186000 Burger buns imported from other country is not included in 'Nominal GDP' as GDP means market values of all final goods produced in a given economy. b) CPT inflation rate Weighted average increase in the prices = > Sausages = 2.10 - 2 = $0.1 Pens = 3 - 2 = $1 Burger buns = 3 - 1 = $2 \r\n = $0.1 + $ 1 + 2/3 = $ 1.033 This is weighted average increase in prices. To know the rate (%) follow the below method: Total expenditure in year - 1: = (10,000 times 2) + (15000 times 2) + (8000 times 1) = 20,000 + 30,000 + 8000 = $ 58,000