Q1 Look at the table labeled Lemonade and Cookies. Assuming that the economy produces only these…
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Question “Q1 Look at the table labeled Lemonade and Cookies. Assuming that the economy produces only these…”
Q1 Look at the table labeled Lemonade and Cookies. Assuming that the economy produces only these two commodities, fill in the blanks on the answer sheet for the letters A to H in the paragraph below. Be sure to show your calculation (maximum one line for each). You may leave your answer as a fraction, rather than as a specific number. Table: Lemonade and Cookies Lemonade Cookies 2013 Output 200 glasses 100 cookies 2013 Prices $1 per glass $2 per cookie 2014 Output 300 glasses 100 cookies 2014 Prices $1 per glass $2.20 per cookie According to the table, nominal GDP in 2013 was [A], in 2014 it was [B]. Thus, the growth rate of nominal GDP from 2013 to 2014 was [C]. If 2013 is the base year, real GDP in 2013 was [D], and real GDP in 2014 was [E]. Thus, the real GPD grow by [F] %.
Answer
Nominal GDP 2013 = 200 USD 1 + 100 $ 2.
Nominal GDP = $ 400
Nominal GDP for 2014 = 300 $1 + 100 $0.2.20
Nominal GDP 2014 = $520
Basis year 2013
Real GDP 2013 = 200 $1 + 100 $2
Real GDP 2013 = $ 400
Real GDP in 2014 = 300 $1 + 100 $2
2014 Real GDP = $ 500
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$520- $400 Growth rate nominal GDP 2013-2014 = 30%
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500 – 400 Real GDP growth rate between 2013 and 2014 =? =25% $400
Conclusion
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