In an economy, the total expenditures for a market basket of goods in year 1 (the base year) were $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Question

Quizplus · Accepted Answer

The GDP price index is calculated by dividing the total expenditure in year 2 by the total expenditure in the base year (year 1) and then multiplying by 100. So, ($5,500 billion / $5,000 billion) * 100 = 110.

In an Economy, the Total Expenditures for a Market Basket