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%
6.25 percent

−106.25%
negative 106.25 percent

−6.25%
negative 6.25 percent
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Answer 1

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

For the year 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:
GDP = $800 (sunglasses) + $800 (sunscreen) = $1600

For the year 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:
GDP = $1200 (sunglasses) + $500 (sunscreen) = $1700

Now, we can calculate the growth rate of nominal GDP:

\[ \text{Growth Rate} = \left(\frac{\text{Nominal GDP in 2001} - \text{Nominal GDP in 2000}}{\text{Nominal GDP in 2000}}\right) \times 100 \]

Substituting the values we calculated: \[ \text{Growth Rate} = \left(\frac{1700 - 1600}{1600}\right) \times 100 = \left(\frac{100}{1600}\right) \times 100 = 6.25% \]

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

So the correct response is: 6.25%