Economics-GDP

1. An economy produces only three products: A, B and C. The prices and quantities for the years 2009, 2010 and 2011 are given below.

Prices                                                                 Quantities

2009             2010               2011                           2009                   2010               2011

A $4              $6                  $6                                200                   240                  280

B $20            $22                $26                                40                     60                    70

C $2              $4                  $4                                400                    500                 600

Using the above information answer the following questions. Show all calculations in an organized fashion. (a) Calculate nominal GDP for each year. (b) Calculate real GDP for each year using ‘09 as the base year. (c) Calculate the growth rate in real GDP between ‘09 and ’10 (d) Calculate real GDP for eac h year using ’10 as the base year. (e) Using the new GDP figures calculate the growth rate in real GDP between ‘09 and ‘10 and ’10 and ‘11 . (f) Using ‘06 as the base year calculate chain weighted or chain linked real GDP for ’09 and ‘10 . Show and explain your calculations. (g) Calculate re al GDP for each year using ’11 as the base year. (h) Using the new GDP figures calculate the growth rate in real GDP between ‘10 and ‘11 . (i) Using ’09 as the base year calculate chain weighted or chain linked real GDP for ’11 . Show and explain your calculations. (j) Using your answers to 1 (a) and (f) above calculate the chain weighted or chain linked GDP deflators for ‘09 and ’10, when ’09 is the base year. Calculate the resulting inflation rate.