Scenario: Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each.
-Refer to the scenario above.Real GDP growth in Bookland from 1990 to 1991 was closest to ________.
A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent

Question

Quizplus · Accepted Answer

Real GDP growth is calculated based on quantities produced and constant prices, not current prices. For 1990, the base year, Real GDP is 10,000 books * $10 = $100,000. For 1991, using 1990 prices, Real GDP is 11,000 books * $10 = $110,000. The growth from $100,000 to $110,000 is 10 percent.

Scenario: Bookland Is a Country That Produces Only Books