Table 12-18
$$\begin{array} { | l | c | r | r | r | }
\hline & { \mathbf { 2 0 0 8 } } & & { \mathbf { 2 0 1 3 } } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$
A very simple economy produces three goods: cameras, legal services, and books.The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-Refer to Table 12-18.What is the GDP deflator in 2013 if 2013 is the base year?

Question

Table 12-18
 $$\begin{array} { | l | c | r | r | r | } 
\hline &  { \mathbf { 2 0 0 8 } } & & { \mathbf { 2 0 1 3 } } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$ 
A very simple economy produces three goods: cameras, legal services, and books.The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above.
-Refer to Table 12-18.What is the GDP deflator in 2013 if 2013 is the base year?

Quizplus · Accepted Answer

To calculate the GDP deflator, we need to use the formula:

GDP deflator = Nominal GDP / Real GDP x 100

Since 2013 is the base year, the prices in that year will be used to calculate real GDP.

Nominal GDP in 2013 = (120 x \$12) + (45 x \$20) + (210 x \$45) = \$3,090
Real GDP in 2013 = (120 x \$12) + (45 x \$20) + (210 x \$45) = \$3,090

Therefore, GDP deflator in 2013 = Nominal GDP / Real GDP x 100 = 100

Table 12-18 A Very Simple Economy Produces Three Goods: Cameras, Legal Services