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GDP calculations

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See attached file:
Quantities Produced Quantities Produced Prices Prices
CDs Tennis Racquets CDs Tennis racquets

Year 2004 100 200 20 110
Year 2005 120 210 22 120

1. Calculate real GDP for 2004 and 2005 using 2004 prices. By what percent did real GDP grow?
2. Calculate the value of the price index for GDP for 2005 using 2004 as the base year. By what percent did prices increase?
3. Now calculate real GDP for 2004 and 2005 using 2005 prices. By what percent did real GDP grow?

(See attachment for table).

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The solution calculates real GDP and price index for a situation where only CDs and tennis racquets are produced.

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