GDP

Student 's Name

Subject

Professor 's Name

Date

Macroeconomics Applied

2004 2005

Quantity Prices Quantity Prices

CD 100 200 120 210

Tennis Racquets 20 110 22 120 Calculate real GDP for 2004 and 2005 using 2004 prices . By what percent did real GDP grow

2004 2005

Quantity Prices in 2004 Value Quantity Prices in 2004 Value

CD 100 200 20 ,000 .00 120 200 24 ,000 .00

Tennis Racquets 20 110 2 ,200 .00 22 110 2 ,420 .00

GDP for 2004 (100 200 (20

110 20 , 000 .00 2 , 200 .00 22 , 200 .00

Real GDP (120 200 (22 110 24 , 000 .00 2 , 420 .00 26 , 420 .00 change 26 , 420 .00 - 22 , 200 .00

22 , 200 .00 4 , 220

22 , 200 .19009 100 19 .009 or 19

Calculate the value of the price index for GDP for 2005 using 2004 as the base year . By what percent did prices increase

2005

Quantity Prices Value Quantity Prices in 2004 Value

CD 120 210 25 ,200 .00 120 200 24 ,000 .00

Tennis Racquets 22 120 2 ,640 .00 22 110 2 ,420 .00

Nominal GDP (120 210 (22 120 25 , 200 .00 2 , 640 .00 27 , 840 .00

Real GDP for 2005 (120 200 (22 110 24 , 000 .00 2 , 420 .00 26 , 420 .00

Price Index 100 (Nominal GDP / Real GDP 100 (27 , 840 / 26 , 420

Price Index 105 .37

Based on the computed index , it can be said that the price level rose a bit more than 5 from the year 2004 to 2005

Calculate real GDP for 2004 and 2005 using 2005 prices . By what percent did real GDP grow

2004 2005

Quantity Prices in 2005 Value Quantity Prices Value

CD 100 210 21 ,000 .00 120 210 25 ,200 .00

Tennis Racquets 20 120 2 ,400 .00 22 120 2 ,640 .00

Real GDP for 2004 (100 210 (20 120 21 , 000 .00 2 , 400 .00 23 , 400 .00

GDP for 2005 (120 210 (22 120 25 , 200 .00 2 , 640 .00 27 , 840 .00 change 27 , 840 .00 - 23 , 400 .00

23 , 400 .00 4 , 440

23 , 400 .1897 100 18 .97 or 19

As per the Bureau of Economic Analysis website , the US economy exhibits a strong and sustainable growth as indicated by the values obtained from the computed real GDPs for the years 2003 to 2005 . It was noted that the major contributors to the said growth would include an increase in personal consumption expenditures , exports , equipment and software industries , government spending , as well as residential fixed investments . However , it cannot be left unnoticed that there has been a significant decrease in imports as well as in the contribution of the private inventory investments thus resulting to a slight decrease in real GDP for the second quarter of 2005 . Also , there has been an increase in prices as reflected by the computed price indices for the quarters of the past years vis-a-vis the figures computed for the year 2005

Thus , taking...