Use the table to answer the question.
2000 2001
Quantity Price ($) Quantity Price ($)
Sunglasses 80 10 100 12
Sunscreen 100 8 50 10
The table above gives the quantities and prices for a hypothetical economy that only produces sunglasses and sunscreen. What is the growth rate of Nominal GDP from 2000 to 2001?
(1 point)
Responses
−6.25%
negative 6.25 percent
−106.25%
negative 106.25 percent
106.25%
106.25 percent
6.25%
6.25 percent
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page 17 of 17
To calculate the Nominal GDP for each year, we multiply the quantity by the price for each product and then add the values together.
For 2000:
GDP = (Quantity of Sunglasses * Price of Sunglasses) + (Quantity of Sunscreen * Price of Sunscreen)
GDP = (80 * 10) + (100 * 8)
GDP = 800 + 800
GDP = 1600
For 2001:
GDP = (Quantity of Sunglasses * Price of Sunglasses) + (Quantity of Sunscreen * Price of Sunscreen)
GDP = (100 * 12) + (50 * 10)
GDP = 1200 + 500
GDP = 1700
The growth rate of Nominal GDP from 2000 to 2001 can be calculated using the formula:
((Nominal GDP in 2001 - Nominal GDP in 2000) / Nominal GDP in 2000) * 100
((1700 - 1600) / 1600) * 100 = (100 / 1600) * 100 = 0.0625 * 100 = 6.25%
Therefore, the growth rate of Nominal GDP from 2000 to 2001 is 6.25%.