For the following question(s), suppose that an economy produces only food and clothing, and that price and quantity data are given in the table below.

-Suppose that Year 1 is the base year. Year 2 real GDP is
A) $200.
B) $270.
C) $310.
D) $390.
E) $450.

Question

For the following question(s), suppose that an economy produces only food and clothing, and that price and quantity data are given in the table below.
 
-Suppose that Year 1 is the base year. Year 2 real GDP is
A) $200. 
B) $270. 
C) $310. 
D) $390. 
E) $450.

Quizplus · Accepted Answer

Year 1 real GDP is $200. Year 2 real GDP is $200 * (1 + 0.15) = $230. Year 3 real GDP is $230 * (1 + 0.10) = $253. Year 4 real GDP is $253 * (1 + 0.10) = $278.3. Year 5 real GDP is $278.3 * (1 + 0.10) = $306.13. Year 6 real GDP is $306.13 * (1 + 0.10) = $336.74. Therefore, Year 2 real GDP is $230.

For the Following Question(s), Suppose That an Economy Produces Only