University of Illinois
Macroeconomic Principles - Econ 103 - Spring 2013
TA: Zheng Zhang
The answer to question 4 quiz 6(pay attention to last two questions)
The economy of Tuland producers only two products book s and digital cameras. The following
information is available for production and prices of Tuland’s products for the years 2009 and
2010.
2009
Books
Digital cameras
2010
Quantity
Price
Quantity
Price ($)
100
20
$5.00
$50.00
105
40
$6.00
$40.00
Use above information,calculate the following values.
For chain-weighted GDP growth rate and chain-weighted real GDP use (arithmetic)
average.
1. Real GDP for 2009 using 2009 as base year equals $1500.( E nter your response rounded to
two decimal places)
100 × $5 + 20 × $50 = $1500
2. Real GDP for 2009 using 2010 as base year equals $1400.( E nter your response rounded to
two decimal places)
100 × $6 + 20 × $40 = $1400
3. Real GDP for 2010 using 2009 as base year equals $2525.( E nter your response rounded to
two decimal places)
105 × $5 + 40 × $50 = $2525
4. Real GDP for 2010 using 2010 as base year equals $2230.( E nter your response rounded to
two decimal places)
105 × $6 + 40 × $40 = $2230
5. GDP growth rate using 2009 as base year equals 68.33 %.( E nter your response rounded to
two decimal places)
2525−1500
× 100% = 68.33%
1500
6. GDP growth rate using 2010 as base year equals 59.29%.( E nter your response rounded to two
decimal places)
2230−1400
× 100% = 59.29%
1400
7. Chain-weighted GDP growth rate equals 63.81%( E nter your response rounded
to two decimal places)
68.33%+59.29%
= 63.81%
2
8. Chain-weighted Real GDP for 2010 equals $2457.15.( E nter your response rounded
to two decimal places)
For this question, use the result in question 1. i.e. $1500 and then multiply it by the chainweighted GDP growth rate calculated in question (7) i.e. 63.81% so $1500 × 63.81% = 2457.15
Note: This question is unique in dealing with chain weighted GDP growth rate, you need to use
geometric average to calculate chain-weighted GDP growth rate elsewhere without being given any
specification on which method to use. For example, follow geometric average on the exams.