Consider an economy with two goods, cheese and salad. Suppose that the prices and quantities sold...
Consider an economy with two goods, cheese and salad. Suppose that the prices and quantities sold in 2012 and 2013 are the following:
|
Good |
2012 Price |
2013 Price |
2012 Quantity |
2013 Quantity |
|
Cheese |
10 |
12 |
10 |
9 |
|
Salad |
15 |
16 |
5 |
8 |
a. Calculate the nominal GDP for 2012 and for 2013. Explain how you got your numbers.
b. Calculate the real GDP for 2013 using 2012 as a base year
c. Calculate the cost of the CPI basket if the market basket includes 2 cheese and 1 salad in 2012
Homework Answers
a.
the nominal GDP for 2012
=(price*quantity)
=(10*10+15*5)
=175
the nominal GDP for 2013
=(price*quantity)
=(12*9+16*8)
=236
b.
Calculate the real GDP for 2013
=(price of 2012*quantity of 2013)
=(10*9+15*8)
=210
c.
the cost of the CPI basket in 2012=2*10+1*15=35
the cost of the CPI basket in 2013=2*12+1*16=40
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