Finding real gdp with the given data

Reference no: EM1314516

Use the following data to answer questions 1-3 (be sure to provide all calculations).

	Quantity		Prices
Year	CD's	Tennis Racquets	CD's	Tennis Racquets
2004	110	200	$18	$90
2005	120	210	$20	$95

Real GDP is GDP evaluated at the market prices of some base year.

1. Calculate real GDP for 2004 and 2005 using 2004 prices. By what percent did real GDP grow?

2. Calculate the value of the price index for GDP for 2005 using 2004 as the base year. By what percent did prices increase?

3. Now calculate real GDP for 2004 and 2005 using 2005 prices. By what percent did real GDP grow?

4. Review the GDP information for the past few years from the Bureau of Economic Analysis's Website. Provide a brief summary of the GDP trends over that timeframe and discuss two or three events which may have caused these trends.

Reference no: EM1314516

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