Question

a) Consumers spend $1200 buying plastic bags, $500 buying bread, and $80 on imported peanut butter. b) The Government spends $300 buying bread and $90 buying imported peanut butter. c) The bread company buys $100 of flour from a flour company and uses it entirely to make bread which they sell all of it to domestic consumers. The bread company buys $500 of new bread machines from a domestic machine company. d) The wheat company exports $180 of wheat. Question: Calculate the GDP of Stonyland in 2019. Enter only numbers. Do not enter letters or symbols. Year Pв QB Ps Qs 2015 $2.00 15 $3.50 10 2016 $2.50 20 $4.00 12 Refer to the table above. Suppose the country of Berryland only produces blueberries and strawberries, purchased by domestic consumers. We have the following data about the price and quantity produced of blueberries (PB, QB) and strawberries (PS, QS). Base year is 2015. Question: Calculate the real GDP growth rate in percentage between 2015 and 2016. Round up to two decimal places. Do not enter letters or symbols. If the nominal interest rate is 10 percent and the inflation rate is 4 percent, then what is the real interest rate? Enter numbers only. Do not enter letters or symbols.

Answer 1

Answer:

The Real GDP Growth Rate = 26.15%

Real Interest Rate = 6%

Explanation:

GDP = Consumption Expenditure + Government Purchases + Investment Expenditure + Net exports ( Exports - Imports)

Consumption Expenditure = Plastic bags + Bread

Consumption Expenditure = $1200 + $500

Consumption Expenditure = $1700

Government Spending = Bread = $300

Investment Expenditure = Final Bread made by bread company + Machines Purchased  

Investment Expenditure = $100 + $500

Investment Expenditure = $600

Exports = Wheat Exported = $180

Imports = Imported Peanut Butter by Consumer + Imported Peanut Butter by Government

Imports = $80 + $90

Imports = $170

Net Exports = Exports - Imports

Net Exports = $180 - $170

Net Exports = $10

Total GDP = 1700 + 300 + 600 + 10  

Total GDP = $2610

Nominal GDP in 2015 = Price * Quantity

Nominal GDP in 2015 = $2 * 15 + $3.50 * 10

Nominal GDP in 2015 = $30 + $35

Nominal GDP in 2015 = $65

Nominal GDP 2016 = $2.50 * 20 + $4 * 12

Nominal GDP 2016 = $50 + $48

Nominal GDP 2016 = $98

Real GDP 2015 = Nominal GDP 2015 = $65 . This is because 2015 is base year.

Real GDP 2016 = $2 * 20 + $3.50 * 12

Real GDP 2016 = $40 + $42

Real GDP 2016 = $82

The Real GDP Growth Rate = (Real GDP 2016 - Real GDP 2015) / Real GDP 2015 * 100

The Real GDP Growth Rate = (82 - 65) / 65 * 100

The Real GDP Growth Rate = 17/65 * 100

The Real GDP Growth Rate =  0.2615385 * 100

The Real GDP Growth Rate = 26.15%

b. Nominal interest Rate = 10%

Inflation Rate = 4%

Real Interest Rate = Nominal Interest Rate - Inflation Rate

Real Interest Rate = 10% - 4%

Real Interest Rate = 6%