Suppose an economy consists of three goods, pizzas, movies, and lattes. The goods have the following prices per unit and quantities produced over three different years: Price of Pizzas Quantity of pizza Price of lattes Quantity of lattes Price of Movies Quantity of movies 2019 $14.00 400 $5 1000 $7 600 2020 $14.25 500 $5.25 1100 $8 100 2021 $14.99 550 $6 1130 $8.00 500 a)How much is the nominal GDP each year? At what rate does the economy grow in 2020 and 2021, year over year? b) How much is real GDP each year and at what rate does the economy grow? Use 2019 as the Base Year. c)Briefly interpret the two measures of GDP growth in each year
|
Suppose an economy consists of three goods, pizzas, movies, and lattes. The goods have the following prices per unit and quantities produced |
|||||||||
|
over three different years: |
|||||||||
|
Price of Pizzas |
Quantity of pizza |
Price of lattes |
Quantity of lattes |
Price of Movies |
Quantity of movies |
||||
|
2019 |
$14.00 |
400 |
$5 |
1000 |
$7 |
600 |
|||
|
2020 |
$14.25 |
500 |
$5.25 |
1100 |
$8 |
100 |
|||
|
2021 |
$14.99 |
550 |
$6 |
1130 |
$8.00 |
500 |
a)How much is the nominal
b) How much is real GDP each year and at what rate does the economy grow? Use 2019 as the Base Year.
c)Briefly interpret the two measures of GDP growth in each year – how are they different and why? Reference the chapter concepts and also the numbers in the table
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
