(Year 2000, Year 2001)
QUANTITY
...Popcorn: (200,250)
....Novels: (50,30)
.....Shoes: (8,10)
PRICE
...Popcorn: ($1,$2)
....Novels: ($20,$25)
.....Shoes: ($100,$80)
If 2000 is the base year, what is the real GDP in 2001?
NOMINAL GDP
...2000: $1,100
...2001: $2,050
no, no, no. See my response post to "urgent economics -gdp" above.
To calculate the real GDP in 2001 using 2000 as the base year, we need to adjust the quantities using the prices of the base year.
First, let's calculate the nominal GDP for each year, which is the total value of all goods and services produced using the current prices.
Nominal GDP in 2000:
Popcorn: 200 units * $1 = $200
Novels: 50 units * $20 = $1000
Shoes: 8 units * $100 = $800
Nominal GDP in 2001:
Popcorn: 250 units * $2 = $500
Novels: 30 units * $25 = $750
Shoes: 10 units * $80 = $800
Now, we need to adjust the nominal GDP of 2001 to reflect the prices of the base year, the year 2000. This will give us the real GDP.
To do this, we use the GDP deflator, which is calculated by dividing the nominal GDP by the real GDP and multiplying by 100.
GDP deflator in 2001:
= (Nominal GDP in 2001 / Nominal GDP in 2000) * 100
= (($500 + $750 + $800) / ($200 + $1000 + $800)) * 100
= ($2050 / $2000) * 100
= 102.5
Now, we can calculate the real GDP in 2001 using the GDP deflator:
Real GDP in 2001:
= Nominal GDP in 2001 / (GDP deflator / 100)
= $2050 / (102.5 / 100)
= $2050 / 1.025
= $2000
Therefore, the real GDP in 2001, using 2000 as the base year, is $2000.