Are Amazon.com prices Real?

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

• Quantity 2004 cd's 110 tennis racquets 200 Prices 2004 cd's $18 tennis racquets $90 Quantity 2005 cd's 120 tennis racquests 210 Prices 2005 cd's $20 tennis racquests $95 1. Calculate real GDP for 2004 and 2005 using 2004 prices. By what percent did real GDP grow? 2. Calculate the value of the prices 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' website. Provide a brief summary of the GDP trends over that timeframe and discuss two or three events which may have caused these trends. Be sure to show your work for each calculation. Can anyone help me with this.

• Answer:

  1. 2004 GDP @ 2004 prices 110 x $18 = $1,980 CDs 200 x $90 = $18,000 Rackets Total = $19,980 2005 GDP @ 2004 prices 120 x $18 = $2,160 210 x $90 = $18,900 Total = $21,060 21,060 / 19,980 = 1.05 About 5.4%. 2. CDs 20/18 = 1.111 or about 11.1%. Rackets 95/90 = 1.0555 or about 5.6%. 3. 2004 GDP @ 2005 prices 110 x $20 = $2,200 200 x $95 = $19,000 Total = $21,200 2005 GDP @ 2005 prices 120 x $20 = $2,400 210 x $95 = $19,950 Total = $22,350 22,350 / 21,200 = 1.0542 or about 5.4%. 4. Can't help here.