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# Real GDP

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The Republic of Republic produces two goods, marshmallows (MM) and soda water (SW). In 1994, the 100 units of MM produced sold for \$3 per unit and the 50 units of SW produced sold for \$1 per unit. In 1999, the 150 units of MM produced sold for \$6 per unit, and the 75 units of SW produced sold for \$2 per unit. Calculate Real GDP for 1999, assuming that 1994 is the base year.

Country A produces two goods, elephants and saddles. In the year 2001, the 20 units of elephants produced sold for \$3,000 per unit and the 30 units of saddles produced sold for \$300 per unit. In 2002, the 25 units of elephants produced sold for \$4,000 per unit, and the 45 units of saddles produced sold for \$250 per unit. Real GDP for 2002, assuming that 2001 is the base year is:

10. A Honda Accord sells for \$17,600 in the United States and for SF25,520 in Switzerland. Given an exchange rate of SF1.45 = \$1, how do the car prices of both countries compare?

https://brainmass.com/economics/exchange-rates/real-gdp-287678

#### Solution Preview

The Republic of Republic produces two goods, marshmallows (MM) and soda water (SW). In 1994, the 100 units of MM produced sold for \$3 per unit and the 50 units of SW produced sold for \$1 per unit. In 1999, the 150 units of MM produced sold for \$6 per unit, and the 75 units of SW produced sold for \$2 per unit. Calculate Real GDP for 1999, assuming that 1994 is the base ...

#### Solution Summary

Response helps in estimating Real GDP

\$2.19
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## Reason Nominal GDP is greater than the Real GDP

Visit the Bureau of Economic Analysis Web site, http://www.bea.gov, and access the BEA interactively by selecting National Income and Product Account Tables. Select Frequently Requested NIPA Tables, and use Tables 1.1 and 1.2 to identify the GDP (nominal GDP) and real GDP for the past four quarters. Why was nominal GDP greater than real GDP in each of those quarters? What were the percentage changes in nominal GDP and real GDP for the most recent quarter? What accounts for the difference?

Reason for Nominal GDP is greater than the Real GDP

Reason for differences

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