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Homework answers / question archive / since 2007, Country A has been producing only computer chips

since 2007, Country A has been producing only computer chips

Economics

since 2007, Country A has been producing only computer chips. the nominal GDP was $189billion in 2007, and its total output was 45billion. if 2007 is the base price year, what will be the:

a) the base price

b) Real GDP for the year 2007

c ) the real GDP for the year 2008, when the total output of the country increase by 20%

 

i need a step by step calculations of all the 3 questions please

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a) Computation of Base Price: 

Base price = Nominal GDP /Output 

= $189 billion/$45 billion 

= $4.2 billion

 

b) Computation of Real GDP for 2007:

Real GDP for 2007 = $189 billion.

Real GDP and nominal GDP for base year is always equal because in base year price level is 100.

 

c) Computation of Real GDP in 2008:

Increase in output = 20*45/100 = 900/100 = 9 billion

Total output in 2008 = 45+6 = 54 billion

Real GDP in 2008 = Output in 2008 * Price of Base Year = 54* 4.2 = $226.8 billion

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