This preview shows page 1. Sign up to view the full content.
Unformatted text preview: of every single good or
service went up 43 percent during this
period. The prices of some goods went up
more than the prices of other goods, and the
prices of some goods actually fell. Here is the
percentage increase or decrease in the prices
of a few selected items during this time
period. In particular, notice what happened to
college tuition. B Food and beverages
College tuition 298 Chapter 11 Measuring Economic Performance ↑ 36%
↑ 130 Real GDP is shown in column 5. To calculate it, we multiply the price of watches in
our chosen base year of 1987 by the currentyear quantity. For example, to get real GDP
in 2003, we take the quantity of watches produced in 2003 and multiply it by the price of
watches in 1987.
A quick look at real GDP figures tells us
that because real GDP in 2004 ($40,000) is
higher than that in 2003 ($38,000), the
View Full Document
This document was uploaded on 01/16/2014.
- Winter '14