Question

Year	Quantity of Ice Blocks	Price of Ice	Quantity of Salmon	Price of Salmon
2014	105	$2	25	$10
2015	95	$3	30	$15

Task 1: Calculate the value of 2014 nominal GDP in Arctica.

210+250=460 nominal GDP

Task 2: Calculate the value of 2015 nominal GDP in Arctica.

285+450=735 nominal GDP

Task 3: Using 2014 as your base year, calculate the value of 2015 real GDP in Arctica.

50+90=140 real GDP

Task 4: Did nominal GDP or real GDP grow more between 2014 and 2015? Can you explain why?

hello, can anyone answer only the last part of this question (task 4) clearly please?

Answer 1

Task 3: Real GDP 2015 = Current year quantity x Base year price = 95 x 2 + 30 x 10 = 190 + 300 = 490

Task 4: Growth in Nominal GDP = (Nominal GDP in 2015 - Nominal GDP in 2014)/Nominal GDP in 2014 x 100

                                                   = (735 - 460)/460 x 100 = 59.78%

Growth in Real GDP = (Real GDP in 2015 - Real GDP in 2014)/Real GDP in 2014 x 100

                                = (490 - 460)/460 x 100 = 6.52%

So, Nominal GDP grow more between 2014 and 2015.