Simple economy Q4. Gorgonzola cane, yo-yos, rum, peanuts, harmonicas, and peanut butter. Assume that one- quarter of all the sugar cane is used to produce rum and one- half of all the peanuts are used to produce peanut butter. a small produces only six goods: sugar 2013 2014 2015 Product Quantity Price Quantity Price Quantity Price 300 Sugar cane Yo-yos 240 $0.80 240 $1.00 $1.15 600 2.50 700 3.00 750 4.00 Rum 150 10.00 160 12.00 180 15.00 2.00 25.00 Peanuts s00 450 2.50 450 2.50 85 85 Harmonicas 75 75 30.00 30.00 Peanut butter 100 4.50 85 4.50 5.00 a. Use the production and price information in the table to calculate nominal GDP for 2015. b. Use the production and price information in the table to calculate real GDP for 2013, 2014, and 2015 using 2013 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from 2014 to 2015? c. Use the production and price information in the table to calculate real GDP for 2013, 2014, and 2015 using 2014 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from 2014 to 2015?

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Q4. Gorgonzola is a small island nation with a simple economy that produces only six goods: sugar
cane, yo-yos, rum, peanuts, harmonicas, and peanut butter. Assume that one- quarter of all the sugar
cane is used to produce rum and one- half of all the peanuts are used to produce peanut butter.
2015
Quantity Price Quantity Price Quantity Price
2013
2014
Product
Sugar cane
Yo-yos
240
s0.80
240
S1.00
300
S1.15
600
2.50
700
3.00
750
4.00
Rum
150
10.00
160
12.00
180
15.00
Peanuts
s00
2.00
450
2.50
450
2.50
Harmonicas
75
25.00
75
30.00
85
30.00
Peanut butter
100
4.50
85
4.50
85
5.00
a. Use the production and price information in the table to calculate nominal GDP for 2015.
b. Use the production and price information in the table to calculate real GDP for 2013, 2014, and
2015 using 2013 as the base year. What is the growth rate of real GDP from 2013 to 2014 and
from 2014 to 2015?
c. Use the production and price information in the table to calculate real GDP for 2013, 2014, and
2015 using 2014 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from
2014 to 2015?
Transcribed Image Text:Q4. Gorgonzola is a small island nation with a simple economy that produces only six goods: sugar cane, yo-yos, rum, peanuts, harmonicas, and peanut butter. Assume that one- quarter of all the sugar cane is used to produce rum and one- half of all the peanuts are used to produce peanut butter. 2015 Quantity Price Quantity Price Quantity Price 2013 2014 Product Sugar cane Yo-yos 240 s0.80 240 S1.00 300 S1.15 600 2.50 700 3.00 750 4.00 Rum 150 10.00 160 12.00 180 15.00 Peanuts s00 2.00 450 2.50 450 2.50 Harmonicas 75 25.00 75 30.00 85 30.00 Peanut butter 100 4.50 85 4.50 85 5.00 a. Use the production and price information in the table to calculate nominal GDP for 2015. b. Use the production and price information in the table to calculate real GDP for 2013, 2014, and 2015 using 2013 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from 2014 to 2015? c. Use the production and price information in the table to calculate real GDP for 2013, 2014, and 2015 using 2014 as the base year. What is the growth rate of real GDP from 2013 to 2014 and from 2014 to 2015?
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