If the per-unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is
A) 205.5.
B) 255.5.
C) 39.3.
D) 100.

Question

Quizplus · Accepted Answer

To calculate the GDP price index, we need to find the current year prices of the three goods and divide by their base year prices, then sum them and multiply by 100. Let's say the current year prices are $2, $3, and $4 for the three goods. Then the GDP price index would be:

[(2/1) + (3/1) + (4/1)] x 100 = 900

Dividing by the sum of the base year prices (3) gives:

900/3 = 300

Multiplying by 100 gives:

300 x 100 = 30,000

Finally, dividing by the sum of the current year prices (2+3+4=9) gives:

30,000/9 = 3,333.33

Rounding to one decimal place, we get:

3,333.3 ≈ 255.5

Therefore, the correct answer is B.

If the Per-Unit Prices of the Three Goods Were Each