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 A. ​$1,140. B. ​$560. C. ​$880. D. ​$690.

Answer 1

Answer:D. $690

Explanation:

GIVEN THE FOLLOWING :

YEAR 2009

Guns produced = 80

​price of gun =$5

Butter produced = 40

price of butter = ​$4

Year 2018

Guns produced = 90

Price of guns = $6

Butter produced = 60

Price of butter = $10

REAL GDP FOR TYROVIA FOR 2018 USING 2009 AS BASE YEAR IS GIVEN AS:

(GUNS PRODUCED IN 2018 × PRICE OF GUNS IN 2009) + (BUTTER PRODUCED IN 2018 × PRICE OF BUTTER ON 2009)

REAL GDP = ( 90 × $5) + (60 × $4)

REAL GDP = $450 + $240 = $690

Answer 2

Answer:

C. ​$880.

Explanation:

2009 80 ​$5 40 ​$4

2018 90 $6 60 $10

Real GDP for Tyrovia for 2018 using 2009 as the base year equals:

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

CPI = 90/80  = 1.125 for guns and 60/40 = 1.5 for butter

Real GDP = (90 x 6) / 1.125 + (60 x 10) / 1.5 = 480 + 400 = $880