Answer to Question #215362 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:

The GNP at market 2000 prices, GNP at current 1995 prices GNP at constant 1995 prices in year 2000

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]$\times 100$

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