Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5.The current year per unit prices of these three goods are A = $2, B = $3, and C = $1.If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is:

Question

Quizplus · Accepted Answer

To calculate the GDP price index, we need to first find the total value of goods produced in the current year and in the base year using their respective prices.

Base year value = (10 x $1) + (30 x $1) + (5 x $1) = $45

Current year value = (10 x $2) + (30 x $3) + (5 x $1) = $105

Therefore, the GDP price index in the current year is (current year value ÷ base year value) x 100:

GDP price index = ($105 ÷ $45) x 100 = 233.3, which rounded to one decimal place is 255.5.

Therefore, the answer is B, 255.5.

Only Three Goods Are Produced in an Economy in the Following