Question

Given (GDP Analysis):

Industry	2017	2018
Q.pistachios	1,000	1,100
Q.video games	500	500
P.pistachios	$1.00	$1.50
P.video games	$15.00	$14.75

What is nominal GDP in 2018?    10) ______

A) $8,500             B) $9,025.

C) $8,600              D) none of the above.

11) Given (GDP Analysis):

What is real GDP in 2018 using the Laspeyres Index?       11) ______

A) $9,025.            B) $8,500

C) $8,600              D) none of the above.

12) Given (GDP Analysis):

What is real GDP in 2018 using the Paasche Index?           12) ______

A) $8,500             B) $8,600

C) none of the above.       D) $9,025.

13) Given (GDP Analysis):

What is the real GDP growth rate using the Laspeyres index?       13) ______

A) 1.2% B) 1.7%

C) none of the above.       D) 1.4%

Answer 1

a) Nominal GDP in 2018

=1100x1.50 + 500x14.75

=1650+7375

=9025

Option(B)

b) real GDP in 2018 using the Laspeyres Index

=Cost of basket in 2018/cost of base year basket = 8875/8500 x 100 = 104.4

=Real GDP in 2018 = 9025/104.4x100

=8644

Option(D)

c) real GDP in 2018 using the Paasche Index

=cost of basket in 2018/cost of basket in 2018 in base year x 100

=9025/8500x100 = 104.9

=9025/104.4 = 8600

Option(B)

d) real GDP growth rate using the Laspeyres index

RGDP = RGDP2018/RGDP2017 - 1 X100

8643.6/8500-1x100

=1.7%

Option(B)