Answer to Question #95100 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

Using 2016 as a base year, real GDP in 2017 is ...
[1] 3125
[2] 7500
[3] 5250
[4] 7450

Answer 1

[4] 7450

Real GDP is equal to the sum of the base year price×current year quantity of all the goods:

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

2017: (1100×2) + (525×10) = + 2,200 + 5,250 = $ 7,450.