2.1 Measurement of Economic Performance

1a. Calculate Utilistan's nominal GDP for the two years represented in the table. Utilistans' Nominal GDP for 2010 is:

• $250

• $22

• $150

• $59

Answer explanation

1b. Calculate Utilistan’s nominal GDP for the two years represented in the table. What is the nominal GDP for 2011

• $348

• $250

• $43

• $24

Answer explanation

2. Calculate the nominal GDP growth rate between the two years.

• 39%

• 45%

• 15%

• 3%

Answer explanation

3. Why might the nominal GDP growth rate not provide an accurate indication of the actual change in output between 2010 and 2011?

• If there was inflation, the number would be overstated

• It is a great method--it always shows economic performance, not inflation

Answer explanation

4a. Using 2010 as a base year, calculate Utilistan’s real GDP for (real GDP = output in a particular year multiplied by the prices from the base year):

• 250

• 378

• 240

• There is no way to determine an answer

Answer explanation

4b. Using 2010 as a base year, calculate Utilistan’s real GDP for (real GDP = output in a particular year multiplied by the prices from the base year): 2011

• 290

• 348

• 250

• 100

Answer explanation

4c. Was the real GDP for 2011 larger or smaller than the nominal GDP? Explain the difference.

• larger

• smaller

Answer explanation

5. Calculate the r​eal GDP growth rate​in Utilistan between 2010 and 2011.

• 20.83%

• 16%

• 32.04%

• 2%

Answer explanation

5a. How does the growth rate in real GDP compare to the growth rate in nominal GDP you calculated for #2?

• Real GDP growth rate is smaller

• Real GDP growth rate is larger

Answer explanation

6. Calculate the GDP deflator price index for Utilistan in 2010

• 100

• 250

• 120

• 220

Answer explanation