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Calculation of Real GDP.... Numerical Examples

This document contains 6 questions regarding macroeconomics concepts like nominal GDP, real GDP, and GDP deflators. Question 1 provides production and price data for 3 fruits (apples, oranges, bananas) in a base year and current year and asks to calculate nominal GDP, real GDP, GDP deflators and determine if nominal GDP change is due to price or quantity changes. Question 2 provides nominal GDP data for 3 years and asks to calculate real GDP and GDP deflators. Questions 3-5 provide price and quantity data for goods/services over multiple years and ask similar calculation questions. Question 6 provides a partial GDP data table and asks to complete it.

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Aisha ismail
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142 views

Calculation of Real GDP.... Numerical Examples

This document contains 6 questions regarding macroeconomics concepts like nominal GDP, real GDP, and GDP deflators. Question 1 provides production and price data for 3 fruits (apples, oranges, bananas) in a base year and current year and asks to calculate nominal GDP, real GDP, GDP deflators and determine if nominal GDP change is due to price or quantity changes. Question 2 provides nominal GDP data for 3 years and asks to calculate real GDP and GDP deflators. Questions 3-5 provide price and quantity data for goods/services over multiple years and ask similar calculation questions. Question 6 provides a partial GDP data table and asks to complete it.

Uploaded by

Aisha ismail
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Macroeconomics

Assignment No 1

Question No 1: Consider an economy that produces only three types of fruit: apples, oranges,
and bananas. In the base year (a few years ago), the production and price data were as follows:
Fruit Quantity Price
Apples 3,000 2
Bananas 6,000 3
Oranges 8,000 4
In the current year the production and price data are as follows:
Fruit Quantity Price
Apples 4,000 3
Bananas 14,000 2
Oranges 32,000 5

a. Find nominal GDP in the current year and in the base year. What is the percentage
increase since the base year?
b. Find real GDP in the current year and in the base year. By what percentage does real
GDP increase from the base year to the current year?
c. Find the GDP deflator for the current year and the base year. By what percentage does
the price level change from the base year to the current year?
d. Would you say that the percentage increase in nominal GDP in this economy since the
base year is due more to increases in prices or increases in the physical volume of output?

Question NO 2: You are given the following data

a. Calculate nominal GDP in each of the three years.


b. Calculate Real GDP in each of the three years, using 2015 as the base year.
c. Calculate the GDP deflator for each of the three years.
d. Calculate percentage change in nominal GDP, real GDP and GDP deflator.

Question No 3: Suppose people only consume 3 different goods. The following table shows the
prices and quantities of each good consumed in 2006, 2007, and 2008.

Price of Quantity of Price of Quantity of Price of Quantity of


Year Fish fish mutton mutton beef beef
2006 7 400 8 225 10 175
2007 8 550 7 250 12 275
2008 9 900 6 265 16 275

a. Calculate nominal GDP in each of the three years.


b. Calculate Real GDP in each of the three years, using 2006 as the base year.
c. Calculate the GDP deflator for each of the three years.
d. Calculate percentage change in nominal GDP, real GDP and GDP deflator.

Question No 4: Considering the following data on GDP:

Year Nominal GDP


GDP Deflator
2014 17,419 108.3
1994 7,309 73.8

a. What was the growth rate of nominal GDP between 1994 and 2014?

b.     What was the growth rate of the GDP deflator between 1994 and 2014?

c.     What was real GDP in 1994 measured in 2009 prices?

d.     What was real GDP in 2014 measured in 2009 prices?

e.     What was the growth rate of real GDP between 1994 and 2014?

f.     Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? 
Question No 5: Below are some data on milk and honey:

Year Price of Quantity Price of Quantity of


Milk of Milk Honey Honey
2016 1 100 2 50
2017 1 200 2 100
2018 2 200 4 100

a.  Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2016 as the
base year.

b.     Compute the percentage change in nominal GDP, real GDP, and the GDP deflator in
2017 and 2018 from the preceding year.

Question No 6: Complete the following table

Year Real GDP Nominal GDP GDP


(in 2000 dollars) (in current dollars) Deflator
(based year
2000)
1970 1,200 40
1980 5,000 3,000
1990 6,000 100
2000   8,000  80
2010 7,500 15,000
2020 10,000 300
2030 50,000 250

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