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%
negative 106.25 percent

−6.25%
negative 6.25 percent

6.25%
6.25 percent

106.25%
106.25 percent
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Answer 1

To calculate the Nominal GDP for both years and then determine the growth rate, we can follow these steps:

1. Calculate Nominal GDP for 2000: \[ \text{Nominal GDP}{2000} = (\text{Quantity of Sunglasses} \times \text{Price of Sunglasses}) + (\text{Quantity of Sunscreen} \times \text{Price of Sunscreen}) \] \[ \text{Nominal GDP}{2000} = (80 \times 10) + (100 \times 8) = 800 + 800 = 1600 \]

2. Calculate Nominal GDP for 2001: \[ \text{Nominal GDP}{2001} = (\text{Quantity of Sunglasses} \times \text{Price of Sunglasses}) + (\text{Quantity of Sunscreen} \times \text{Price of Sunscreen}) \] \[ \text{Nominal GDP}{2001} = (100 \times 12) + (50 \times 10) = 1200 + 500 = 1700 \]

3. Calculate the Growth Rate of Nominal GDP: \[ \text{Growth Rate} = \frac{\text{Nominal GDP}{2001} - \text{Nominal GDP}{2000}}{\text{Nominal GDP}_{2000}} \times 100 \] \[ \text{Growth Rate} = \frac{1700 - 1600}{1600} \times 100 = \frac{100}{1600} \times 100 = 6.25% \]

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