Answer to Question #95099 in Macroeconomics for Chris Rodrigues

Question

Suppose Ghana produces cocoa and timber, and the following hypothetical data is provided for 2016 and 2017.

2016 2017
Good Quantity Price Quantity Price
Cocoa 1000 2 1100 3
Timber 500 10 525 8

Between 2016 and 2017, nominal GDP grew by ...
[1] 5.25%
[2] 10%
[3] 5%
[4] 7.14%

Answer 1

[4] 7.14%

Nominal GDP is simply equal to the sum of the current year price×current year quantity of all the goods.

2016: (1000×2) + (500×10) = + 2,000 + 5,000 = $ 7,000.

2017: (1100×3) + (525×8) = + 3,300 + 4,200 = $ 7,500.

nominal GDP grew by:

7,500 / 7,000 × 100 - 100 = 7.14%