Consider the following simple economy that produces only three goods: 2009 (Base Year) 2017 Product Quantity Price Quantity Price Denim pants 80 $40 100 $50 Wine 90 11 80 10 Textbooks 15 90 20 100 Real GDP in 2017 equals $?

Question

Damaris Lam

Business

22 May, 15:57

Consider the following simple economy that produces only three goods: 2009 (Base Year) 2017 Product Quantity Price Quantity Price Denim pants 80 $40 100 $50 Wine 90 11 80 10 Textbooks 15 90 20 100 Real GDP in 2017 equals $?

+3

Answers (1)

Know the Answer?

Quinton Rose · Answer 1

Real GDP 2017 = $6.680

Explanation:

First of all you have to calculate the GDP in 2009

80 * $40 = $3.200

90 * 11 = $990

15 * 90 = $1.350

GDP 2009 = $5.540

Now you have to calculate the GDP with the quantities of 2017 and the prices of 2009:

100 * $40 = $4.000

80 * $11 = $880

20 * $90 = $1.800

Real GDP 2017 = $6.680

Now you know the real GDP in the year 2017, without the effect of the inflation that is the variation of the prices through the years, and as you can see the real GDP is greater than the GDP 2009.