Question

QUESTION 15

1. The United Kingdoms of Dempsania, produces two goods, Single (S) and Double (D) rainbows. The price and quantities for the years 2015, 2016 and 2017 ate as follow:

   Year	PD	QD	PS	QS
   2015	6	200	4	400
   2016	9	240	6	480
   2017	12	264	8	528

   Note: all answers should be rounded to the closest integer, i.e. 33.3 = 33 and 66.6 = 67

   What is the growth rate in Nominal output for 2016., base year 2015?

Answer 1

Nominal output is the market value of all final goods and services produced in an economy in a year. Nominal value changes due to shifts in both quantity and price. Thus nominal output for a year will be summation of (Price*Quantity) of each product produced in that year.

Nominal output for 2015 = (6*200) + (4*400) = 2800

Nominal output for 2016 = (9*240) + (6*480) = 5040

Growth rate in nominal output = (Present year nominal output - Past year nominal output) / Past year nominal output * 100

Growth rate in nominal output = (5040- 2800) / 2800 *100

Growth rate in nominal GDP = 80%