Using the expenditure approach calculate GDP from the following data:
- personal consumption expenditures $1556
- net exports $132
- gross private domestic investment $162
- government purchases of goods and services $450
- personal income $1700
- corporate profits $600
The solution explains the concept of GDP and uses the GDP formula to calculate the GDP. The solution is very detailed. Any student can easily go through the explanation and understand what is in the response. It is ideal for students who want to learn the concepts so that they can apply to similar problems later on. The solution also presents two approaches of calculating GDP and arrives at the same answer using any of the approaches.
Nowhereistan is a poor country in an island in the middle of nowhere. It produces only apples, bananas and oranges. The following are the data for 2009 (base year) and 2010
Fruit Quantity 2009 Price 2009 Quantity 2010 Price 2010
Apples 3000 bags $2 per bag 4000 bags $3 per bag
Bananas 6000 bunches $3 Per Bunch 14000 bunches $2 per bunch
Oranges 8000 bags $4 per bag 32000 bags $5 per bag
a) Find the nominal GDP in both years? What is the growth in nominal GDP?
b) Find the real GDP in both years? What is the growth of the real GDP?
c) Find the GDP deflator for both years? What is the percentage change in price level?
d) Is the growth in nominal GDP more because of the change in prices or because of a real growth in output of the country?