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Chapter 8: Q. 13 (page 187)

Consider the table below for the economy of a nation whose residents produce five final goods.

Short Answer

Expert verified

The real GDP is $2,229.

Step by step solution

01

Step 1:     Explanation of option a

The gross domestic product (GDP) is the total worth of all products and services generated within a country's borders.

a. The present price value of all commodities and services is known as nominal GDP. The calculation of nominal GDP for the years 2013and 2017is shown in the table below:

02

    Explanation of option b

b. Nominal GDP is adjusted for inflation to produce real GDP. The fluctuation in price from one year to the next is referred to as inflation. If the base year is 2013, the pricing in 2017will be the same as it 2013

The real GDP is$2,229

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