Question

Goods 1990 Quantities 1990 Prices 2012 Quantities 2012 Prices

papayas 10 $1.00 20 $0.50
fish 15 $0.60 20 $0.80
skirts 8 $4.00 15 $4.00

Refer to the above data

Assuming that 1990 is the base year, Real GDP in 2012 is:

a. $49
b. $51
c. $86
d. $92.
e. Not possible to calculate without the CPI.

GDP in 1990 is:

a. $92
b. $49
c. $31
d. $86
e. impossible to calculate without the CPI

GDP in 2012 is:
a. $51
b. $86
c. $92
d. $49
e. not possible to calculate without the CPI

Answer 1

Real GDP in 2012 is $92

GDP in 1990 is $51

GDP in 2012 is $86

Step-by-step explanation:

In this question, we apply the produced goods amount formula which is

= Price × Quantity produced

For Real GDP in 2012, the computation is

= (1990 Papaya price × Quantity produced in 2012) + (1990 fish price × Quantity produced in 2012) + (1990 skirts price × Quantity produced in 2012)

= ($1 × 20) + ($0.60 × 20) + ($4 × $15)

= 20 + 12 + 60

= $92

GDP in 1990 is

= (1990 Papaya price × Quantity produced in 1990) + (1990 fish price × Quantity produced in 1990) + (1990 skirts price × Quantity produced in 1990)

= ($1 × 10) + ($0.60 × 15) + ($4 × 8)

= 10 + 9 + 32

= $51

GDP in 2012 is

= (2012 Papaya price × Quantity produced in 2012) + (2012 fish price × Quantity produced in 2012) + (2012 skirts price × Quantity produced in 2012)

= ($0.50 × 20) + ($0.80 × 20) + ($4 × 15)

= 10 + 16 + 60

= $86