Answer to Question #273864 in Macroeconomics for Tevita

Question

Suppose that there are only two goods produced in the economy, Call center services and banking services. Prices (P), quantities (Q) and the number of workers (W) occupied in the production of each good for year 1 and year 2 are given by the following table :

 

 

Year 1

 

 

 

Year 2 

 

 

 

Two

 

 

 

P1

 

 

Q1

 

 

W1

 

 

P2

 

 

Q2

 

 

W2

 

products

 

 

 

 

 

 

Call cen

tre

10

10

0

50

 

12

10

0

50

Banking

 

10

20

0

50

 

12

23

0

60

 

 

 

 

a. What is nominal GDP in each year?                                                              

b. Using year 1 prices, what is real GDP in year 2? What is the growth rate of real gdp

c. What is the rate of inflation using the GDP deflator?                             

d. Using year 1 prices, what is real GDP per worker in year 1 and year 2? What is labour productivity growth between year 1 and year 2 for the whole economy?

       

Answer 1

solved in Excel: