Table 19-18
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 19-18. What is the GDP deflator in 2013 if 2013 is the base year?

Question

Table 19-18
  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 19-18. What is the GDP deflator in 2013 if 2013 is the base year?

Quizplus · Accepted Answer

The formula for calculating GDP deflator is (Nominal GDP/Real GDP) * 100. Since 2013 is the base year, the value of Real GDP for 2013 will be 1. Multiplying the quantities produced in 2013 with the base year prices and summing them up, we get the Nominal GDP for 2013 as (400*30)+(200*200)+(8000*10) = 416000. Thus, GDP deflator for 2013 = (416000/416000)*100 = 100.

Table 19-18 a Very Simple Economy Produces Three Goods: Cameras