Econ- 5.1 Part 2 Formative Assessment Option 2

In a given year, an economy produces the following goods with their respective quantities and prices:

• Bread: 5,000 units at $3 each

• Milk: 4,000 units at $2 each

• Smartphones: 300 units at $500 each

• Televisions: 100 units at $800 each

• Bicycles: 250 units at $200 each

• Calculate the nominal GDP of this economy. SHOW YOUR WORK BY UPLOADING AN IMAGE OF THE MATH YOU DID TO FIND YOUR ANSWER.

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What is the main purpose of calculating real GDP?

• • To measure the impact of inflation on GDP growth.

• • To compare the GDP of different countries.

• • To determine the total market value of all finished goods and services.

• • To measure the actual increase in the volume of production.

If the nominal GDP of a country increases, but the real GDP remains the same, what can we infer?

• • The country's production of goods and services has increased.

• • The country's production of goods and services has decreased.

• • The country's price level has increased.

• • The country's currency has appreciated.

Which measure of GDP is more useful for comparing the economic performance of a country over time?

• • Nominal GDP, because it reflects the current market prices.

• • Real GDP, because it adjusts for inflation and shows true growth in production.

• • Nominal GDP, because it is easier to calculate.

• • Real GDP, because it includes the value of intermediate goods.

What is one potential issue with using nominal GDP as a measure of economic well-being?

• • It does not account for changes in population.

• • It is not affected by changes in price levels.

• • It does not include the value of imported goods.

• • It can be misleading during periods of inflation.

Suppose a country's nominal GDP is $1,200 billion and the GDP deflator is 120. What is the real GDP?

• • $1,000 billion

• • $1,100 billion

• • $1,200 billion

• • $1,400 billion

In Year 1, the nominal GDP of a country is $800 billion, and the GDP deflator is 110. In Year 2, the nominal GDP is $900 billion, and the GDP deflator is 120. Calculate the real GDP for both years.

• • Year 1: $727.27 billion, Year 2: $750 billion

• • Year 1: $800 billion,

  • Year 2: $900 billion

• • Year 1: $727.27 billion, Year 2: $833.33 billion

• • Year 1: $909.09 billion, Year 2: $1,000 billion

A country reports a nominal GDP of $2,200 billion with a GDP deflator of 110. What is the real GDP?

• • $1,800 billion

• • $2,000 billion

• • $2,200 billion

• • $2,420 billion

Given that the nominal GDP is $4,500 billion and the GDP deflator is 90, what is the real GDP?

• • $4,050 billion

• • $4,500 billion

• • $5,000 billion

• • $5,556 billion

In 2010, a country had a nominal GDP of $700 billion and a GDP deflator of 140. Calculate the real GDP for 2010.

• • $500 billion

• • $600 billion

• • $700 billion

• • $800 billion