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Assume that a country produces only two goods, automobiles and fast PCs. In year 1, automobiles cost $20,000 each and the PCs cost $3,000 each;
Assume that a country produces only two goods, automobiles and fast PCs. In year 1, automobiles cost $20,000 each and the PCs cost $3,000 each; 1,000 auto- mobiles and 10,000 PCs are produced. In year 2, the price of automobiles has increased to $22,000; because a new, even faster type of PC is about to be introduced, the price of fast PCs has fallen to $700. In year 2, 1,000 automobiles and 15,000 PCs are produced. (a) Fill in the following table. Year 1 Year 2 Nominal GDP Total Current-Dollar Expenditures Real GDP i. At fixed year 1 prices ii. At fixed year 2 prices (b) Using the technique of chain-weighting, calculate the percentage change in real GDP between year 1 and year 2
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