Economics In A Global Environmet

Gross Domestic Product Calculations and Trends

Question One

1. Calculate the real GDP for 2005 and 2006 using 2005 prices

2005:

(90 X $18) + (180 X $100) = 1,620 + 18,000 = 19,620

2006:

(100 X $18) + (190 X $100) = 1,800 + 19,000 = 20,800

2. Calculate by what percentage did the real GDP grow

20,800 Ð'- 19,620 = 1,180 / 19,620 = 0.0601 X 100 = 6.01%

Question Two

1. Calculate the value of the price index for GDP for 2006 using 2005 as the base year

[(90 X 20) + (180 X 110)] / [(90 X 18) + (180 X 100)] X 100

[1,800 + 19,800 = 21,600] / [1,620 + 18,000 = 19,620]

21,600 / 19,620 = 1.10 X 100 = 110.09

2. By what percent did the price increase = 1.10%

Question Three

1. Calculate the real GDP for 2005 and 2006 using 2006 prices

2005:

(90 X 20) + (180 X 110) = 1,800 + 19,800 = 21,600

2006:

(100 X 20) + (190 X 110) = 2,000 + 20,900 = 22,900

2. By what percent did real GDP grow

22,900 Ð'- 21,600 = 1,300 / 21,600 X 100 = 6.01%

Question Four

Using the Bureau of Economic Analysis website table 1.15 of the Gross Domestic Product section trends were identified.

The GDP for 2002, 2003 and 2004 increased in increments over the three years reported.

The areas that steadily contributed to these increases were;

1. Personal consumption expenditures Ð'-