Question

Using prices in 2020 as a base year, calculate real GDP in 2020 and 2021.

Q 2020 P 2020 Q 2021 P 2021

Apples 120 1 240 3

oranges 65 2 90 4

plams 80 4 120 5

(Q) represent Quantity and (P) price

Answer 1

Let's calculate the real GDP in 2020 year:

$$Real\ GDP_{2020}=120\cdot\$1+65\cdot\$2+80\cdot\$4=\$570.$$

Let's calculate the real GDP in 2021 year:

$$Real\ GDP_{2021}=240\cdot\$1+90\cdot\$2+120\cdot\$4=\$900.$$