Download Gross Domestic Product - Section 3 - Module 11

Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
The following figures are available for an
economy:
Consumer expenditures = $600
Business expenditures = $150
Government expenditures = $200
Imports = $75
Exports = $65
Transfer payments = $50
Depreciation = $25
Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
The following figures are available for an economy:
Consumer expenditures = $600
Business expenditures = $150
Government expenditures = $200
Imports = $75
Exports = $65
Transfer payments = $50
Depreciation = $25
Questions:
1. Calculate the Gross Domestic Product for this economy.
2. The GDP figure that you calculated above is for year 1 and is comprised of:
90 economics textbooks @ $10 each, and
40 economics workbooks @ $ 1 each
In year 2 this same economy produced:
90 economics textbooks @ $15 each, and
40 economics textbooks @ $ 2 each.
Calculate nominal GDP for year 1 and year 2.
Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
The following figures are available for an economy:
Consumer expenditures = $600
Business expenditures = $150
Government expenditures = $200
Imports = $75
Exports = $65
Transfer payments = $50
Depreciation = $25
Answers:
1. $940.
2. Year 1 GDP is $ 940
Year 2 GDP is $1430
Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
GDP Deflator Calculation:
Suppose an economy produces only shoes and clothes.
The following table shows the prices and quantities of
shoes and clothes in two years.
2008 – Shoes $100 – Quantity – 130
Clothes $207 – Quantity – 240
2009 – Shoes $160 – Quantity – 170
Clothes $215 – Quantity – 245
From the above information, calculate the GDP Deflator
for year 2009.
Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
2008 – Shoes $100 – Quantity – 130
Clothes $207 – Quantity – 240
GDP Deflator = (Nominal GDP/Real
GDP) x 100
2009 – Shoes $160 – Quantity – 170
Clothes $215 – Quantity – 245
Nominal GDP =
2008 – ($100 x 130) + ($207 x 240) = $ 62,680
2009 – ( $160 x 170) + ($215 x 245) = $79,875
Real GDP (2008 is the base year)
2008 – ($100 x 130) + ($207 x 240) = $62,680
2009 – ($100 x 170) + ($207 x 245) = $67,715
Mr.
Weiss
Gross Domestic Product – Section 3 – Module 11
Nominal GDP =
2008 – ($100 x 130) + ($207 x 240) = $ 62,680
2009 – ( $160 x 170) + ($215 x 245) = $79,875
Real GDP (2008 is the base year)
2008 – ($100 x 130) + ($207 x 240) = $62,680
2009 – ($100 x 170) + ($207 x 245) = $67,715
Therefore the GDP Deflator is:
2008 – (62,680/62,680) x 100 = 100
2009 – (79, 875/67,715) x 100 = 118