Question

In 2018, Wakanda produced 100 quantity of A at a price of 2.5, 80 quantity of B at a price of 2, and 10 quantity of C at a price of 8. In 2019, they produced 110 quantity of A at a price of 2.25, 90 quantity of B at a price of 2.6, and 12 quantity of C at a price of 9.

a. Calculate the growth rate of nominal GDP from 2018 to 2019. (Again enter as percent)

b. Calculate the real GDP in 2019 (with 2018 base).

c. Calculate the growth rate of real GDP from 2018 to 2019. (As percent)

Answer 1

	2018			2019			REAL GDP OF 2019 IN 2018 PRICES = IV*II
	production	prices	NOMINAL PRODUCTION = I*II	production	prices	NOMINAL PRODUCTION = IV*V
	I	II	III	IV	V	VI	VII
A	100	2.5	250	110	2.25	247.5	275
B	80	2	160	90	2.6	234	180
C	10	8	80	12	9	108	96

NOMINAL GDP IS THE SUM OF NOMINAL PRODUCTION VALUES OF GOODS A, B, C FOR EACH YEAR.

NOMINAL GDP	IN 2018	490$
	IN 2019	589.5$

GROWTH = (589.5-490)/490 = 20%

REAL GDP OF 2019 = 551$ (SUM OF THE ENTRIES IN BLUE COLUMN)

REAL GDP GROWTH = (551-490)/490 = 12%