module 11 Interpreting Real Gross Domestic Product 117
Section 3 Measurement of Economic Performance
What was the value of real GDP in each year?
Year 1 Year 2
a. $1,400 $2,700
b. 1,900 2,700
c. 1,400 2,000
d. 1,900 2,000
e. 1,400 1,900- Real GDP per capita is an imperfect measure of the quality of
life in part because it
a. includes the value of leisure time.
b. excludes expenditures on education.
c. includes expenditures on natural disasters.
d. excludes expenditures on entertainment.
e. includes the value of housework.
5. Refer to the 2009 data in the table below.
Which of the following must be true?
I. Residents of Japan were worse off than residents of the
United States or the European Union.
II. The European Union had a higher nominal GDP per
capita than the United States.
III. The European Union had a larger economy than the
United States.
a. I only
b. II only
c. III only
d. II and III
e. I, II, and IIITackle the Test: Free-Response Questions
- The economy of Britannica produces three goods: computers,
DVDs, and pizza. The accompanying table shows the prices and
output of the three goods for the years 2008, 2009, and 2010.
a. What is the percent change in computer production from
2008 to 2009?
b. What is the percent change in the price of pizza from 2009
to 2010?
c. Calculate nominal GDP in Britannica for 2008.
d. Calculate real GDP in Britannica for 2008 using 2008 as the
base year.
e. Calculate real GDP in Britannica for 2010 using 2008 as the
base year.Answer (5 points)
1 point:0.5/10× 100 =5%
1 point:$1/$16× 100 =6.25%
1 point:($900× 10)+ ($10× 100)+ ($15× 2)=$9,000+ $1,000+ $30= $10,030
1 point:Real GDP equals nominal GDP in the base year, so this answer is the
same as in part c.
1 point:($900× 12)+ ($10× 110)+ ($15× 3)=$10,800+ $1,100+ $45=
$11,945
- Use the information in the table below to answer the following
questions.
a. Calculate the percent increase in nominal GDP between
2005 and 2010 for each country.
b. What happened to the price level in each country between
2005 and 2010?
c. Calculate real GDP in each country in 2010, using 2005 as
the base year.
d. Calculate the percent increase in real GDP between 2005 and
2010 for each country.
e. Compare the two countries’ real GDP per capita in 2010
using 2005 as the base year.
Computers DVDs Pizza
Year Price Quantity Price Quantity Price Quantity
2008 $900 10 $10 100 $15 2
2009 1,000 10.5 12 105 16 2
2010 1,050 12 14 110 17 3Year Nominal GDP Price Level Population
Country A
2005 $2,000 $100 10
2010 4,000 100 20
Country B
2005 $2,000 $100 10
2010 6,000 200 15Nominal GDP in billions of dollars
United States $14,259
Japan 5,049
European Union 16,191