Question

Table 1: GDP country X:2017

	Cars	Restaurant meals
Price	$20,000	$18
Quantity	9	10,000

Table 2:GDP Country X:2018

	Cars	Restaurant Meals
Price	$20,000	$40
Quantity	9	6,000

2. You are interested in calculating real GDP growth in Country X. (Use Table 1 and 2 to answer the following.)

a. Calculate the Laspeyres Price Index (from 2017 to 2018)

b. Calculate the Paasche Price Index (from 2017 to 2018)

c. Calculate the Fisher Price Index (from 2017 to 2018)

Answer 1

1. The price index can be calculated in the following method using their respective formulas-

a.

Thus, Laspeyres Price Index is 161.11

b.

Thus, Paasche Price Index is 145.83

c.

Thus, Fisher Price Index is 153.28.