Question

Consider the following data for​ Tyrovia, a country that produces only two​ products: guns and butter. Year Guns Produced Price of Guns Butter Produced Price of Butter 2009 80 ​$5 40 ​$4 2018 90 6 60 10 Real GDP for Tyrovia for 2018 using 2009 as the base year equals

Answer 1

Answer:

Real GDP for Tyrovia for 2018 using 2009 base prices = (90 x $5) + (60 x $4) = $450 + $240 = $690

Nominal GDP for Tyrovia for 2018 = (90 x $6) + (60 x $10) = $540 + $600 = $1,140

2018 CPI for Tyrovia = [($6/$5) + ($10/$4)] / 2 = (1.2 + 2.5) / 2 = 3.7 / 2 = 1.85 x 100 = 185