Use the table to answer the question.

Question

2000 2001
Quantity Price ($) Quantity Price ($)
Sunglasses 80 10 100 12
Sunscreen 100 8 50 10
The table above gives the quantities and prices for a hypothetical economy that only produces sunglasses and sunscreen. What is the growth rate of Nominal GDP from 2000 to 2001?

(1 point)
Responses

106.25%
106.25 percent

−6.25%
negative 6.25 percent

−106.25%
negative 106.25 percent

6.25%

Answer 1

To calculate the growth rate of Nominal GDP from 2000 to 2001, we first need to calculate the Nominal GDP for each year using the given quantities and prices.

Calculating Nominal GDP for 2000:

• For Sunglasses: Quantity = 80, Price = $10 \[ \text{Revenue from Sunglasses} = 80 \times 10 = 800 \]
• For Sunscreen: Quantity = 100, Price = $8 \[ \text{Revenue from Sunscreen} = 100 \times 8 = 800 \]
• Total Nominal GDP for 2000: \[ \text{Nominal GDP 2000} = 800 + 800 = 1600 \]

Calculating Nominal GDP for 2001:

• For Sunglasses: Quantity = 100, Price = $12 \[ \text{Revenue from Sunglasses} = 100 \times 12 = 1200 \]
• For Sunscreen: Quantity = 50, Price = $10 \[ \text{Revenue from Sunscreen} = 50 \times 10 = 500 \]
• Total Nominal GDP for 2001: \[ \text{Nominal GDP 2001} = 1200 + 500 = 1700 \]

Calculating the growth rate of Nominal GDP: Using the formula for growth rate: \[ \text{Growth Rate} = \left( \frac{\text{Nominal GDP in 2001} - \text{Nominal GDP in 2000}}{\text{Nominal GDP in 2000}} \right) \times 100 \] Substituting the values: \[ \text{Growth Rate} = \left( \frac{1700 - 1600}{1600} \right) \times 100 = \left( \frac{100}{1600} \right) \times 100 = 6.25% \]

Thus, the growth rate of Nominal GDP from 2000 to 2001 is 6.25%.