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Table: Lemonade and Cookies

-(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. The growth rate of nominal GDP from 2013 to 2014 was:

Question

Use the following to answer questions :
Table: Lemonade and Cookies
 
-(Table: Lemonade and Cookies) Look at the table Lemonade and Cookies. Assume that an economy produces only lemonade and cookies. The growth rate of nominal GDP from 2013 to 2014 was:

Quizplus · Accepted Answer

The table shows the nominal GDP values for both lemonade and cookies for both 2013 and 2014. To calculate the growth rate of nominal GDP, we use the formula (nominal GDP in year 2 - nominal GDP in year 1) / nominal GDP in year 1. Plugging in the values, we get ((175 - 100) / 100) * 100 = 75%. However, we need to adjust for inflation by subtracting the inflation rate, which is given as 5%. So, the growth rate of nominal GDP from 2013 to 2014 is:

(75% - 5%) = 70%
 
This means that nominal GDP increased by 70% from 2013 to 2014, which corresponds to an annual growth rate of 11.25%. Therefore, the best choice is C.

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