Consider the hypothetical economy described below. Assume the economy produced o
ID: 1133069 • Letter: C
Question
Consider the hypothetical economy described below. Assume the economy produced only two products: soda-pop and chocolate bars. Assume that 2015 is the base year. You must show your work to receive full credit for your answers. Round all work to dollars and cents and all percentages to 2 decimal places. Prices Per Unit Output Goods 2015 2016 2015 2016 Soda-pop $1.80 $1.90 23 24 Chocolate bars $1.25 $1.50 14 18 (1 point) What is the nominal GDP for 2015? (1 point) What is the nominal GDP for 2016? (1 point) What is real GDP in 2015? (1 point) What is real GDP in 2016? (1 point) By what percentage did nominal GDP change between 2015 and 2016? (1 point) By what percentage did real GDP change between 2015 and 2016? (1 point) Consider the differences between the percentage change in nominal GDP and the percentage change in real GDP from 2015 to 2016. Why were the percentage increases in nominal GDP greater that the percentage increases in real GDP during this time period?
Explanation / Answer
nominal GDP for 2015
=1.80*23+1.25*14
=58.90
nominal GDP for 2016
=1.90*24+1.50*18
=72.60
What is real GDP in 2015=1.80*23+1.25*14=58.90
What is real GDP in 2016=1.80*24+1.25*18=65.70
what percentage did nominal GDP change between 2015 and 2016=72.60/58.90-1=23.26%
By what percentage did real GDP change between 2015 and 2016=65.70/58.90-1=11.54%
because there was rise in the prices which lead to higher change in nominal GDP due to which the percentage increases in nominal GDP greater that the percentage increases in real GDP during this time period
the above is answer..