For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by
this table: $$\begin{array} { | l | l | l | }
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Year 1 quantity } & 15 & 10 \
\hline \text { Year 1 price } & \$ 12 & \$ 12 \
\hline \text { Year 2 quantity } & 17 & 12 \
\hline \text { Year 2 price } & \$ 14 & \$ 15 \
\hline
\end{array}$$
-What is approximately the growth rate of real GDP using base year 1?
A)25%
B)39%
C)13%
D)20%
E)33%

Question

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by
this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Year 1 quantity } & 15 & 10 \
\hline \text { Year 1 price } & \$ 12 & \$ 12 \
\hline \text { Year 2 quantity } & 17 & 12 \
\hline \text { Year 2 price } & \$ 14 & \$ 15 \
\hline
\end{array}$$
-What is approximately the growth rate of real GDP using base year 1?
A)25%
B)39%
C)13%
D)20%
E)33%

Quizplus · Accepted Answer

The real GDP growth rate is calculated using Year 1 prices to value both Year 1 and Year 2 quantities. For Year 1, real GDP = (15 pens * $12) + (10 pencils * $12) = $180 + $120 = $300. For Year 2, using Year 1 prices, real GDP = (17 pens * $12) + (12 pencils * $12) = $204 + $144 = $348. The growth rate = (($348 - $300) / $300) * 100% ≈ 16%. However, since 16% is not an option and the closest provided option is 13%, there seems to be a calculation or rounding error in the question or options. Based on the provided options, 13% is the closest correct answer, acknowledging a discrepancy in calculation or provided options.

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