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Mr. Weiss

Mr. Weiss. Gross Domestic Product – Section 3 – Module 11. The following figures are available for an economy: Consumer expenditures = $600 Business expenditures = $150 Government expenditures = $200 Imports = $75 Exports = $65 Transfer payments = $50 Depreciation = $25. Mr. Weiss.

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Mr. Weiss

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  1. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 The following figures are available for an economy: Consumer expenditures = $600 Business expenditures = $150 Government expenditures = $200 Imports = $75 Exports = $65 Transfer payments = $50 Depreciation = $25

  2. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 The following figures are available for an economy: Consumer expenditures = $600 Business expenditures = $150 Government expenditures = $200 Imports = $75 Exports = $65 Transfer payments = $50 Depreciation = $25 • Questions: • Calculate the Gross Domestic Product for this economy. • The GDP figure that you calculated above is for year 1 and is comprised of: • 90 economics textbooks @ $10 each, and • 40 economics workbooks @ $ 1 each • In year 2 this same economy produced: • 90 economics textbooks @ $15 each, and • 40 economics textbooks @ $ 2 each. • Calculate nominal GDP for year 1 and year 2.

  3. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 The following figures are available for an economy: Consumer expenditures = $600 Business expenditures = $150 Government expenditures = $200 Imports = $75 Exports = $65 Transfer payments = $50 Depreciation = $25 • Answers: • $940. • Year 1 GDP is $ 940 • Year 2 GDP is $1430

  4. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 GDP Deflator Calculation: Suppose an economy produces only shoes and clothes. The following table shows the prices and quantities of shoes and clothes in two years. 2008 – Shoes $100 – Quantity – 130 Clothes $207 – Quantity – 240 2009 – Shoes $160 – Quantity – 170 Clothes $215 – Quantity – 245 From the above information, calculate the GDP Deflator for year 2009.

  5. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 2008 – Shoes $100 – Quantity – 130 Clothes $207 – Quantity – 240 2009 – Shoes $160 – Quantity – 170 Clothes $215 – Quantity – 245 GDP Deflator = (Nominal GDP/Real GDP) x 100 Nominal GDP = 2008 – ($100 x 130) + ($207 x 240) = $ 62,680 2009 – ( $160 x 170) + ($215 x 245) = $79,875 Real GDP (2008 is the base year) 2008 – ($100 x 130) + ($207 x 240) = $62,680 2009 – ($100 x 170) + ($207 x 245) = $67,715

  6. Mr. Weiss Gross Domestic Product – Section 3 – Module 11 Nominal GDP = 2008 – ($100 x 130) + ($207 x 240) = $ 62,680 2009 – ( $160 x 170) + ($215 x 245) = $79,875 Real GDP (2008 is the base year) 2008 – ($100 x 130) + ($207 x 240) = $62,680 2009 – ($100 x 170) + ($207 x 245) = $67,715 Therefore the GDP Deflator is: 2008 – (62,680/62,680) x 100 = 100 2009 – (79, 875/67,715) x 100 = 118

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