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Download Real GDP and price indexes Practice problems Problem: Suppose
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Real GDP and price indexes Practice problems Problem: Suppose an economy produces only one good. In the base year, production was 8 units at a price of $10 each. The next year, production increased to 9 units and the price of the good increased to $12. a. b. c. Find nominal GDP in years 1 and 2. If the price index is 100 in the base year, what is the value of the price index in year 2? Find real GDP in year 2. Suppose a hypothetical national economy can be represented by the following data: Year 2009 2010 2011 2012 d. e. Nominal GDP $1536 $1663 $1792 Price Index (2000 = 100) 128 132 135 140 Real GDP $1274 Find real GDP in years 2009, 2010, and 2012. Find nominal GDP in year 20011. Refer to the following data, which shows output and prices for five years of an economy that produces just one product. If Year 3 is the base year, the price index for year 4 is: Formula: Price Index of Year X = Sum of Year X Price x Base Year Quantity Sum of Base Year Price x Base Year Quantity x 100
