Multiple Choice
Nominal GDP is the market value of:
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11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)
Nominal GDP and Real GDP
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Using the information above, calculate the inflation rate for 2012 in the United States of Barbeque.
A
2.341
B
2.987
C
2.900
D
3.214
Verified step by step guidance1
First, calculate the cost of the basket of goods for each year. For 2010, multiply the price of hot dogs by the quantity of hot dogs and add it to the price of hamburgers multiplied by the quantity of hamburgers: (1 * 400) + (2 * 600).
Repeat the calculation for 2011: (1.05 * 450) + (2.05 * 700).
Repeat the calculation for 2012: (1.10 * 500) + (2.10 * 800).
To find the inflation rate for 2012, use the formula: ((Cost of basket in 2012 - Cost of basket in 2011) / Cost of basket in 2011) * 100.
Substitute the calculated values from the previous steps into the formula to find the inflation rate for 2012.
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