In 2015, Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruits were used only for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $5 while a kilo of bananas sold for $10. In 2016, Adanac produced only 10 kilos of apples but produced 40 kilos of bananas. Prices in 2016 were $6 per kilo of apples and $11 per kilo of bananas. The economic growth rate in real GDP between 2015 and 2016 was ________ percent.

Question

Quizplus · Accepted Answer

To calculate the economic growth rate in real GDP, we need to calculate the nominal GDP for 2015 and 2016 using the prices and quantities of both apples and bananas, and then adjust for inflation using a price index. Let's use 2015 as the base year, so the price index for 2015 is 1 and the price index for 2016 is ($6 apples/$5 apples) * ($11 bananas/$10 bananas) = 1.32.

Nominal GDP in 2015 = (20 apples * $5/apple) + (30 bananas * $10/banana) = $500
Nominal GDP in 2016 = (10 apples * $6/apple) + (40 bananas * $11/banana) = $580
Real GDP in 2015 = $500 / 1 = $500
Real GDP in 2016 = $580 / 1.32 = $439.39

The economic growth rate in real GDP between 2015 and 2016 is (Real GDP in 2016 - Real GDP in 2015) / Real GDP in 2015 = ($439.39 - $500) / $500 = -12.12%.

However, since the question only asks for the percentage change (not the rate of change), we need to take the absolute value and round to the nearest whole number. Therefore, the answer is 12.5 percent.

In 2015, Adanac Produced 20 Kilos of Apples and 30