Table 8-13
Consider the data shown above for Vicuna,a country that produces only two products: oranges and shirts.
-Refer to Table 8-13.Real GDP for Vicuna for 2016 using 2018 as the base year equals
A)$4,620.
B)$5,100.
C)$5,650.
D)$5,850.

Question

Table 8-13
  Consider the data shown above for Vicuna,a country that produces only two products: oranges and shirts.
-Refer to Table 8-13.Real GDP for Vicuna for 2016 using 2018 as the base year equals
A)$4,620. 
B)$5,100. 
C)$5,650. 
D)$5,850.

Quizplus · Accepted Answer

To calculate real GDP using 2018 as the base year, we need to use the formula: 
Real GDP = Nominal GDP / Price Index (in 2018) x 100 
Using the data from the table: 
Nominal GDP in 2016 = (100 x 25) + (200 x 20) = 5,000 
Price index in 2016 (using 2018 as the base year) = [(100 x 30) + (200 x 25)] / [(100 x 20) + (200 x 15)] x 100 = 113.33 
Real GDP in 2016 = 5,000 / 113.33 x 100 = 4,413.78 (rounded to the nearest dollar) 
Therefore, the best choice is C.

Table 8-13 Consider the Data Shown Above for Vicuna,a Country