Question

Only one product D is produced in the country. Its output during the year 2014 and 2015 was 200 and 220 units respectively. The market price of the product during the year was Rs 100 and Rs 110 per unit respectively. Calculate the percentage change in real GDP and nominal GDP in year 2015 using 2014 as the base year.

Answer 1

$\begin{array}{ccccc}\text{Year}& \text{Units}& \text{Market Price}& \text{Real GDP}& \text{Nominal GDP}\\ 2014& 200& 100& 20,000& 20,000\\ 2015& 220& 110& 22,000& 24,200\end{array}$

Percentage Change in Real GDP=$\frac{\text{Change in real GDP}}{\text{Base year GDP}}\times 100$

=$\frac{22,000-20,000}{20,000}\times 100=\frac{2,000}{20,000}\times 100=10\%$

Percentage Change in Nominal GDP=$\frac{\text{Change in nominal GDP}}{\text{Base year GDP}}\times 100$

=$\frac{24,200-20,000}{20,000}\times 100=\frac{4,200}{20,000}\times 100=21\%$

Percentage Change in Real GDP=10%

Percentage Change in Nominal GDP=21%