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Suppose an economy consists of only two types of products: laptops and automobiles. Sales and price data for these two products for two different years

Suppose an economy consists of only two types of products: laptops and automobiles. Sales and price data for these two products for two different years are shown below:

Products

Quantity sold

Price

Quantity sold

Price

Quantity sold

Price

La to

200,000

2,000 500,000 3,000

450,000

3,500

Automobiles

60,000

40,000

80,000

60,000 90,000

80,000

Calculate:

  1. Nominal Gross Domestic Product (GDP) in 2019 and 2021. (4 Marks)
  2. Real Gross Domestic Product (GDP) in 2019 and 2021 using 2015 as base year. (4 Marks)
  3. Based on your answers to questions (a) and (b), which one of them accurately measures the growth of GDP and why? (2 Marks)
  4. Higher GDP is indicated higher income per capital, higher economic growth and increases in distribution of income but GDP does not reflect everything going well the economy. Explain FOUR (4) the limitation in GDP measure with examples. (10 Marks) (Total: 20 Marks)

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