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oooooook - Calculating Nominal GDP Real GDP and Changes in...

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Calculating Nominal GDP, Real GDP, and Changes in GDP Answer Key Consider the following data for the country of Fruitopia (prices are per bushel): Price, 2001 Quantity 2001 Price 2002 Quantity 2002 Apples $10 5 Apples $12 8 Oranges $5 20 Oranges $10 15 Peaches $10 10 Peaches $10 20 a. Calculate the nominal GDP for each of the two years. NGDP(2001) = ∑P01*Q01 = 10*5 + 5*20 + 10*10 = = $250 NGDP(2002) = ∑P02*Q02 = 12*8 + 10*15 + 10*20 = $446 b. Calculate the real GDP for each of the two years using 2001 as the base year. RGDP(2001) = ∑P01*Q01 = 10*5 + 5*20 + 10*10 = = $250 RGDP(2002) = ∑P01*Q02 = 10*8 + 5*15 + 10*20 = $355 c. What is the growth rate in real GDP from 2001 to 2002 using 2001 as the base year? Is real GDP growing or shrinking? RGDP(02) – RGDP(01) $355 - $250 105 G(1) = --------------------------------- * 100 = -------------------- * 100 = ------ * 100 RGDP(01) $250 250 = 42.00% Real GDP grew 42.00% from 2001 to 2002 using 2001 as the base year d. Calculate the real GDP for each of the two years using 2002 as the base year. RGDP(2001) = ∑P02*Q01 = 12*5 + 10*20 + 10*10 = $360 RGDP(2002) = ∑P02*Q02 = 12*8 + 10*15 + 10*20 = $446 e. What is the growth rate in real GDP from 2001 to 2002 using 2002 as the base year? Is real GDP growing or shrinking?
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