Assume an Economy Produces Just Cars and Computers; Use the Information

question 36

Essay

Assume an economy produces just cars and computers; use the information in the table below to answer the following questions about the GDP.
$$\begin{array} { | l | l | l | l | l | } \hline & { \text { Cars } } & & { \text { Camputers } } \\\hline \text { Year } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \\\hline 2018 & 100 & \$ 10,000 & 1,000 & \$ 1,000 \\\hline 2019 & 110 & \$ 12,000 & 1,100 & \$ 900 \\\hline\end{array}$$ (1) Calculate nominal GDP in 2018 and 2019.What is the growth rate in nominal GDP?
(2) Using 2018 as a base year, calculate real GDP in 2019.What is the growth rate in real GDP?
(3) Calculate the GDP deflator in 2019.

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Definitions:

Sales Mix

The combination of different products or services that a company sells, which impacts the overall profitability.

Contribution Margin Ratio

A ratio that measures the percentage of sales revenue available to cover fixed expenses and generate profit, calculated as the contribution margin divided by sales revenue.

Annual Fixed Expenses

Expenses that do not change in total regardless of changes in the volume of activity or production levels, such as rent or salaries.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, showing how much contributes to covering fixed costs and earning profit.