Martina M. answered • 02/18/21

Master of Economics with Teaching and Tutoring Experience

*Real GDP is evaluated at the market prices of the base year, which is 2005 in this case.**Real GDP for 2012 is evaluated by multiplying each quantity in 2012 by its price in 2005, and then adding those together:*

real GDP_{2012} = Q of textbooks in 2012 multiplied by price of textbooks in 2005 + Q of hamb in 2012 multiplied by price of hamb in 2005 etc etc= 100·45+90·2+65·10+700·0.80= **5890**

**b) **

*to evaluate growth rate of real GDP in 2013, first we need to evaluate real GDP in 2013, same way we did for 2012; using prices in 2005 as a base year.**then we move on to evaluate growth rate in 2013, in relation to year prior to 2013, which is 2012.*

real GDP _{2013} = Q of textbooks in 2013 multiplied by price of textbooks in 2005 + Q of hamb in 2013 multiplied by price of hamb in 2005 etc etc= 100·45+100·2+75·10+120·0.80= **5546**

*to evaluate any growth rate ever, use the formula: ((new value - old value)/ old value) ·100*

growth rate g_{r}= ((r.GDP_{2013 }- r.GDP_{2012})/r.GDP_{2012})· 100= ((5546-5890)/5890) = **-5.84%**