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

6.25%
6.25 percent

106.25%
106.25 percent

−6.25%
negative 6.25 percent

−106.25%

Answer 1

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

For 2000:

Nominal GDP = (Quantity of Sunglasses × Price of Sunglasses) + (Quantity of Sunscreen × Price of Sunscreen)

= (80 × 10) + (100 × 8)
= 800 + 800
= 1600

For 2001:

Nominal GDP = (Quantity of Sunglasses × Price of Sunglasses) + (Quantity of Sunscreen × Price of Sunscreen)

= (100 × 12) + (50 × 10)
= 1200 + 500
= 1700

Now we can calculate the growth rate of Nominal GDP:

Growth Rate = [(Nominal GDP in 2001 - Nominal GDP in 2000) / Nominal GDP in 2000] × 100%

= [(1700 - 1600) / 1600] × 100%
= (100 / 1600) × 100%
= 6.25%

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