How do I calculate real GDP using growth rates using base ye
How do I calculate real GDP using growth rates using base year i.2000 and ii.2002 when:
In 2000: Price of apples= $10, quantity=100
Price of bananas=$20,q=100,
price of cherries=35,q=200
In 2001:
Pa=$11, q=103
Pb=$19, q=102
Pc=$35, q= 200
In 2002:
Pa= $12, q= 104
Pb= $20, q= 103
Pc=$36, q=206
Solution
Nominal GDP = P(Year x)×Q(Year x)
In Year 2000:
Nominal GDP = Pa.Qa+Pb.Qb+Pc+Qc
Nominal GDP = (10.100)+(20.100)+(35.200)
Nominal GDP = $10,000
In Year 2001:
Nominal GDP = Pa.Qa+Pb.Qb+Pc+Qc
Nominal GDP = (11.103)+(19.102)+(35.200)
Nominal GDP = $10,071
In Year 2002:
Nominal GDP = Pa.Qa+Pb.Qb+Pc+Qc
Nominal GDP = (12.104)+(20.103)+(36.206)
Nominal GDP = $10,724
(i)
Base Year 2000
Real GDP 2000 = Nominal GDP 2000 = $10,000
Real GDP 2001 = P(Year 2000)Q(Year 2001)
Real GDP 2001 = (10.103)+(20.102)+(35.200)
Real GDP 2001 = $10,070
Real GDP 2002 = P(Year 2000)Q(Year 2002)
Real GDP 2002 = (10.104)+(20.103)+(35.206)
Real GDP 2002 = $10,310
Growth rate of Real GDP from 2000 to 2001 = (10,070-10,000)/10,000 = 0.7%
Growth rate of Real GDP from 2000 to 2002 = (10,310-10,000)/10,000 = 3.1%
(ii)
Repeat the same steps as above using base year prices of 2002


