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Chapter 8: Q. 13 (page 187)

Consider the table below for the economy of a nation whose residents produce five final goods.

Short Answer

Expert verified

The real GDP is $2,229.

Step by step solution

01

Step 1:     Explanation of option a

The gross domestic product (GDP) is the total worth of all products and services generated within a country's borders.

a. The present price value of all commodities and services is known as nominal GDP. The calculation of nominal GDP for the years 2013and 2017is shown in the table below:

02

    Explanation of option b

b. Nominal GDP is adjusted for inflation to produce real GDP. The fluctuation in price from one year to the next is referred to as inflation. If the base year is 2013, the pricing in 2017will be the same as it 2013

The real GDP is$2,229

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Most popular questions from this chapter

Why might a range of dashboard economic indicators be difficult to include in one single measure such as GDP ?

Explain in your own words why the flow of gross domestic product during a given interval must always be equivalent to the flow of gross domestic income within that same period.

Why might a range of dashboard economic indicators be difficult to include in one single measure such as GDP?

Look back at Table 8-3, which explains how to calculate real GDP in terms of 2009constant dollars. Change the base year to2007. Recalculate the price index, and then recalculate real GDP-that is, express column4of Table 8-3 in terms of 2007dollars instead of 2009dollars.

Consider Figure 8-4. Explain what is special about the year at which the two data plots cross, and why this is so.
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