Answer to Question #188553 in Macroeconomics for faisal pasha

Question

In 2019, 200 KGs of oranges are produced at Rs.40/kg, 500 KGs of apples are produced at 120/kg, and 200 Glasses of orange juice are produced at Rs.150/glass.

In 2020, 220 KGs of oranges are produced at Rs.50/kg, 450 KGs of apples are produced at 140/kg, and 230 glasses of orange juice are produced at Rs.135/glass.

 

Assuming 2019 is the base year; calculate the real GDP in 2019 

Answer 1

Answer:

real GDP (2019) = Nominal GDP/GDP Deflator

GDP Deflator (Price Index) for 2019 (base year) = 100.0/100

= 1.00

Nominal GDP (2019) = Rs. (200*40) + (500*120) + (200*150)

= Rs. (8,000 + 60,000 + 30,000)

= Rs. 98,000

$\therefore$ Real GDP (2019) = Rs. (98,000/1.00)

= Rs. 98,000

NOTE: Real GDP and Nominal GDP are always the same in the base year!