Answer
a)
Nominal GDP, year 1: 12 dollars
Nominal GDP, year 2: 20 dollars
Nominal GDP, year 3: 30 dollars
b)
Real GDP, year 1: 12 dollars
Real GDP, year 2: 16 dollars
Real GDP, year 3: 20 dollars
c)
Year 1 GDP deflator: 100
Year 2 GDP deflator: 125
Year 3 GDP deflator: 150
d) 25% growth
e) 20% inflation rate
f) A 100 point scale would likely be what would help in answering parts (d) and (e) without answering parts (b) and (c) first.
Work Step by Step
a)
bars * price = revenue
Year 1:
$3*4=12$
Year 2:
$4*5=20$
Year 3:
$5*6=30$
b)
Year 1:
4 dollars *3 bars = 12 dollars
Year 2:
4 dollars * 4 bars = 16 dollars
Year 3:
4 dollars * 5 bars = 20 dollars
c)
Year 1:
$12/12*100$
$1*100$
$100$
Year 2:
$20/16*100$
$1.25*100$
$125$
Year 3:
$30/20*100$
$1.5*100$
$150$
d)
GDP growth = (year 3 real GDP-year 2 real GDP)/year 2 real GDP
growth = $(20-16)/16$
growth = $4/16$
growth = 25%
e)
inflation = (GDP deflator in year 3 - GDP deflator in year 2)*100/GDP deflator in year 2
$i = (150-125)*100/125$
$i = 25*100/125$
$2500/125=i$
$20=i$
