To calculate Nominal GDP, the formula is:
Nominal GDP = Price x Quantity for each good and then sum all up.
To calculate Real GDP for 2019 using 2018 as the base year, the formula is:
Real GDP = (Price in 2018 x Quantity in 2019) + (Price in 2019 x Quantity in 2019) + ...
Similarly, to calculate Real GDP for 2020 using 2018 as the base year:
Real GDP = (Price in 2018 x Quantity in 2020) + (Price in 2019 x Quantity in 2020) + ...
Let's calculate:
2018 Nominal GDP = (600 x 40,000) + (15,000 x 25,000) + (175,000 x 15,000) + (45 x 60,000) + (2 x 250,000) + (4 x 200,000) = $31,280,000
2019 Nominal GDP = (625 x 42,000) + (16,500 x 24,000) + (175,000 x 15,500) + (48 x 58,000) + (2.50 x 250,000) + (4 x 215,000) = $33,776,500
2020 Nominal GDP = (630 x 42,000) + (16,000 x 24,500) + (175,500 x 15,500) + (50 x 62,000) + (2.50 x 260,000) + (5 x 210,000) = $34,211,500
Using 2018 as the base year, we can calculate Real GDP for 2019 and 2020:
Real GDP for 2019 = (600 x 42,000) + (15,000 x 24,000) + (175,000 x 15,500) + (45 x 58,000) + (2 x 250,000) + (4 x 215,000) = $31,768,500
Real GDP for 2020 = (600 x 42,000) + (15,000 x 24,500) + (175,000 x 15,500) + (45 x 62,000) + (2 x 260,000) + (4 x 210,000) = $32,923,000
Therefore, the Nominal GDP for each given year and the Real GDP for 2019 and 2020 are as calculated above.
the answer is?
The table below shows an economy’s production over the past three years.
2018 2019 2020
Price Quantity Price Quantity Price Quantity
Computers $600 40,000 $625 42,000 $630 42,000
Automobiles $15,000 25,000 $16,500 24,000 $16,000 24,500
Houses $175,000 15,000 $175,000 15,500 $175,500 15,500
Clothing $45 60,000 $48 58,000 $50 62,000
Coffee $2 250,000 $2.50 250,000 $2.50 260,000
Eggs $4 200,000 $4 215,000 $5 210,000
Calculate the Nominal GDP for each given year and the Real GDP for 2019 and 2020 using 2018 as the base year. Suppose that Real GDP is
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