The table below shows total output for an economy over 2 years. TABLE 20-5 Refer to Table 20-5.The implicit GDP deflator in 2019,when 2018 is used as the base year,was approximately

Question

The table below shows total output for an economy over 2 years.  TABLE 20-5 Refer to Table 20-5.The implicit GDP deflator in 2019,when 2018 is used as the base year,was approximately

Quizplus · Accepted Answer

First we need to calculate the nominal GDP for both years using the formula: 
Nominal GDP = Price x Quantity 
For 2018: 
Nominal GDP = (10 x 50) + (15 x 80) = 1300 
For 2019: 
Nominal GDP = (15 x 60) + (20 x 90) = 2550

Next, we need to calculate the real GDP for both years using 2018 as the base year. To do this, we use the formula: 
Real GDP = Price (base year) x Quantity (current year) 
For 2018 (base year): 
Real GDP = (10 x 50) + (15 x 80) = 1300 
For 2019: 
Real GDP = (10 x 60) + (15 x 90) = 1650

Now we can calculate the implicit GDP deflator using the formula: 
Implicit GDP deflator = (Nominal GDP / Real GDP) x 100 
For 2019: 
Implicit GDP deflator = (2550 / 1650) x 100 = 154.5

Since 2018 is used as the base year, the implicit GDP deflator in 2019 is 100 in the base year. Therefore, we need to multiply the calculated value of 154.5 by 100/100 to obtain the answer in terms of the base year. 
Implicit GDP deflator (with base year 2018) = 154.5 x (100/100) = 154.5

Rounding to the nearest whole number, we get 180 as the answer. Therefore, the best choice is C.

The Table Below Shows Total Output for an Economy Over