SI Worksheet
GDP- Answer Key
- What is GDP? Name a couple of things that would be included in GDP. Name a couple of things that would NOT be included.
Gross Domestic Product is the total of all final goods and services produced in a country within a given period of time.
Items included in GDP is almost infinite. It must have a dollar value, be finished, and produced in a specific period of time. Examples include chairs, tables, apples, cars, socks, etc.
Items NOT included in GDP are items not finished, illegal, or made outside of the given time period. Examples include illegal drugs, items sold on the black market, etc.
- What is the equation for calculating GDP? (simplest form)
Gross Domestic Product= Price of Good 1*Quantity of Good 1 + Price of Good 2*Quantity of Good 2 +…….Price of Nth Good*Quantity of Nth Good
- Why do we want to find a country’s GDP?
Gross Domestic Product is an estimated number used to help examine a country’s development and economic growth over a period of time.
- Country A has 6 apples, 4 grapefruit, & 2 watermelons all priced at $1.50, $2.00, & $5.00 respectively.
Country B has 7 apples, 8 grapefruit, & 1 watermelon all priced at $1.25, $2.00, & $3.00 respectively.
Find each country’s GDP.
Country A= 6*$1.50+4*$2.00+2*$5.00= 27
Country B= 7*$1.25+8*$2.00+1*$3.00= 27.75
- What is the difference between NGDP and RGDP?
Nominal Gross Domestic Product is the value of all final goods and services measured at the current year’s prices.
Real Gross Domestic Product is the value of all final goods and services measured using a set of constant prices, often using a base year price.
- How is NGDP calculated? RGDP?
NGDP= Price of Good 1 in Year 1* Quantity of Good 1 in Year 1+ Price of Good 2 in Year 1*Quantity of Good 2 in Year 1………
RGDP=Price of Good 1 at Base Price*Quantity of Good 1 in Year 1 + Price of Good 2 at Base Price*Quantity of Good 2 in Year 1…….
Note: Base Price stays constant while the quantity of goods changes according to the number produced in that year.