Download Name Worksheet K 2-2 AP Macro – Nominal v Real GDP Practice 1

Name _______________________________
AP Macro – Nominal v Real GDP Practice
Worksheet K 2-2
1. Surprise GDP Review
Will each of the following transactions be included in GDP for the United States? Briefly explain why/why not.
a. McCraith Wholesale Beverages builds a new structure in New York Mills, NY
b. Brianna Wilbur autographs a Price Chopper Advantage card and sells it for $35,000 to Elyse Muder
c. Mary Magdalene Tehan buys an existing share of Disney stock
d. Duffy Lemire builds 17 miniature dioramas of wigwams and sells them to a collector in Estonia
e. Whilst travelling through the jungles of Nool, Brandon Newton buys Elvish turkey bacon that he mails back
home to New Hartford
f.
After starting his own publishing company, Steve Rabbia prints 10 million copies of Greg Bello’s stirring
autobiography, Who Moved My Cheese?; the book sells 2 copies.
2. Calculating Nominal and Real GDP, plus some Growth Rates
In 2013, an economy produced only two goods, snarks and bens. It produced 100 snarks which sold for $2 each and 200
bens which sold for $3 each. In 2014, the same economy produced 150 snarks which sold for $3 each and 250 bens which
sold for $4 each
Calculate nominal GDP in both years
Calculate the real GDP for both years, using 2013 prices
Calculate the growth rate in real GDP from 2013 to 2014
The economy of Stappenbeckingham produces three goods: kazoos, ham and didgeridoos. The accompanying table
shows the prices and output of the three goods for the years 2005, 2006 and 2007.
Kazoos
Year
2005
2006
2007
Price
$900
$1,000
$1,050
Ham
Quantity
10
10.5
12
Price
$10
$12
$14
Quantity
100
105
110
Didgeridoos
Price
Quantity
$15
2
$16
2
$17
3
a. What is the percent change in production of each of the goods from 2005 to 2006 and from 2006 to
2007?
b. What is the percent change in prices of each of the goods from 2005 to 2006 and from 2006 to 2007?
c. Calculate nominal GDP in Stappenbeckingham for each of the three years. What is the percent change
in nominal GDP from 2005 to 2006 and from 2006 to 2007?
d. Calculate real GDP in Stappenbeckingham using 2005 prices for each of the three years. What is the
percent change in real GDP from 2005 to 2006 and from 2006 to 2007?
3. Multiple Choice Practice
If prices in an economy are increasing but there is no change in the amount of goods and services being produced,
what will happen to real GDP and nominal GDP?
Change in rGDP
Change in nominal GDP
a.
No change
No change
b.
Increase
Increase
c.
Increase
Decrease
d.
No change
Decrease
e.
No change
Increase