Question

consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the questions that follow: assume that the base year is 2012. good 2012 price $2.00 $4.00 $2.00 2012 quantity 500 1,000 200 2013 price $2.50 $5.00 $1.00 2013 quantity 600 900 300 what was the growth rate of real gdp between the two years? a. 1.67% b. 0% c. 3.2% d. 2.4% e. 4.4%

Answer 1

The growth rate of real GDP between 2012 and 2013 is calculated by using the base year prices and the quantity of goods for each year. The calculations show that the real GDP remained the same at $5,400 for both years, indicating a growth rate of 0%. Therefore correct option is B

Step-by-step explanation:

To calculate the growth rate of real GDP between two years, we use the given quantities and prices for each good in the base year and the year in question. Since the base year is 2012, we will use the prices from 2012 and the quantities from both years to calculate the real GDP for each year. Finally, we compute the growth rate using the real GDP values.

For 2012, the real GDP is calculated as follows:
(500 units of Good 1 × $2.00/unit) + (1,000 units of Good 2 × $4.00/unit) + (200 units of Good 3 × $2.00/unit)

= $1,000 + $4,000 + $400

= $5,400.

For 2013, we use the quantities of 2013 and the prices from 2012 to find the real GDP:
(600 units of Good 1 × $2.00/unit) + (900 units of Good 2 × $4.00/unit) + (300 units of Good 3 × $2.00/unit)

= $1,200 + $3,600 + $600

= $5,400.

The real GDP in both 2012 and 2013 is $5,400, so the growth rate is:
($5,400 - $5,400) / $5,400 = 0%.

Hence, the correct answer is B. 0%.