Answer to Question #214657 in Macroeconomics for CeeEhmDhee

Question

Given the information

Product. Qty produced price. Qty produced. Price

(kg) 1995. 1995. (kg). 2000

Maize. 50 N20 100 N30

Rice. 80 N40 160 N60

Calculate:

1. The GNP at market 2000 prices, GNP at current 1995 prices GNP at constant 1995 prices in year 2000
2. The GNP price deflator (Nominal GNP)/Real GNP

Answer 1

i.

GNP = Quantity $\times$ price year

$1995 \\ (50\times 20) + (80\times 40) = N4200\\ 2000 \\ (1000\times 30) + (160\times 60) =N12600\\$

ii.

GNP for 2000 year using 1995 as the base year.

GNP = Quantity $\times$ price of the base year

$(1000\times 20) + (160\times 40) =N8400\\$

iii.

GNP deflator = [GNP for 2000 $\div$ GNP for 2000 year using 1995 as the base year]$\times 100$

$2000\\ (\frac{12600 } {8400}) \times 100 = 150\\$