Suppose only one Good ‘X’ is produced in the country. Output of Good X during 2018 & 2019 were 100 unite & 110 units respectively………………

Question :Suppose only one Good ‘X’ is produced in the country. Output of Good X during 2018 & 2019 were 100 unite & 110 units respectively. The market price of the product during the two years was ? 50 & 8 56 per unit respectively.
Calculate the percentage change in Real Gross Domestic Product (GDP) in year 2019, using 2018 as the base year.

The correct answer is -To calculate the percentage change in Real Gross Domestic Product (GDP) in 2019 using 2018 as the base year, we need to first calculate the nominal GDP and the real GDP in both the years:

Nominal GDP in 2018 = 100 units x ?50 per unit = ?5,000 Nominal GDP in 2019 = 110 units x ?56 per unit = ?6,160

To calculate real GDP, we need to use the prices of one of the years as the base year prices. Here, we will use the prices of 2018 as the base year prices.

Real GDP in 2018 = 100 units x ?50 per unit = ?5,000 Real GDP in 2019 = 110 units x ?50 per unit (base year price) = ?5,500

The percentage change in real GDP can be calculated as follows:

% Change in Real GDP = [(Real GDP in 2019 – Real GDP in 2018) / Real GDP in 2018] x 100 % Change in Real GDP = [(?5,500 – ?5,000) / ?5,000] x 100 % Change in Real GDP = (500 / 5,000) x 100 % Change in Real GDP = 10%

Therefore, the percentage change in real GDP in 2019 using 2018 as the base year is 10%.