Question

Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012. Good 2012 Price 2012 Quantity 2013 Price 2013 Quantity A $2.00 500 $2.50 600 B $4.00 1,000 $5.00 900 C $2.00 200 $1.00 300 What was the real gross domestic product (GDP) in 2013

Answer 1

Answer:

$5,400

Explanation:

The computation of real gross domestic product is shown below:-

Goods     Price base year   Quantity current year   Expenditure

                    2012                      2013

A                    $2.00                  600                             $1,200

                                                                               ($2.00 × 600)

B                    $4.00                  900                             $3,600

                                                                               ($4.00 × 900)

C                    $2.00                  300                              $600

                                                                               ($2.00 × 300)

Real Gross domestic product                                     $5,400

Therefore, Real GDP is the sum value of all the final goods and services generated by an economy in a given year, which accounts for inflation. The estimate is based on the prices of a selected base year.