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Use the table to answer the 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

−6.25%
negative 6.25 percent

−106.25%
negative 106.25 percent

106.25%
106.25 percent

6.25%
6.25 percent

1 answer

To calculate the growth rate of Nominal GDP from 2000 to 2001, we first need to compute the Nominal GDP for both years.

  1. Calculate Nominal GDP for 2000:

    • Sunglasses: Quantity = 80, Price = $10
      • GDP from sunglasses = 80 * 10 = $800
    • Sunscreen: Quantity = 100, Price = $8
      • GDP from sunscreen = 100 * 8 = $800
    • Total Nominal GDP for 2000 = $800 (sunglasses) + $800 (sunscreen) = $1600

  2. Calculate Nominal GDP for 2001:

    • Sunglasses: Quantity = 100, Price = $12
      • GDP from sunglasses = 100 * 12 = $1200
    • Sunscreen: Quantity = 50, Price = $10
      • GDP from sunscreen = 50 * 10 = $500
    • Total Nominal GDP for 2001 = $1200 (sunglasses) + $500 (sunscreen) = $1700

  3. Calculate the growth rate of Nominal GDP:

    • Growth Rate = (Nominal GDP in 2001 - Nominal GDP in 2000) / Nominal GDP in 2000 * 100%
    • Growth Rate = ($1700 - $1600) / $1600 * 100%
    • Growth Rate = $100 / $1600 * 100%
    • Growth Rate = 6.25%

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