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.

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