00:01
Let's go over this question.
00:04
We want to find nominal and real gdp with 2020 as the base year.
00:13
So let's start with 2020.
00:21
So what we need to do is for the year 2020, we're going to multiply the price of the cups by the quantity of the cups and then we're going to add the quantity of seltzers by multiplied by the price of seltzers.
01:09
So we have 160 seltzers and they are each one dollar.
01:15
So then we can get the overall expenditure.
01:43
So then for real gdp, we need to use the prices of the base year but because this is the base year, it's going to be the same as the nominal gdp.
01:51
Then we calculate gdp deflator.
01:54
So the formula for gdp deflator is equal to nominal gdp over real gdp times 100.
02:19
So we end up getting 100.
02:21
So then let's do the next year.
02:31
So for nominal gdp, we're going to use the prices for 2021.
02:37
So we have two dollars times the number of cups plus four dollars times the quantity of seltzer.
02:59
So two times 135 plus four times 230.
03:08
Then for real gdp, we're going to use the prices from 2020.
03:27
So we have two dollars times 135 cups and the prices are the same for both years for cups but for seltzer, you can see that the price is going to be a dollar instead of four dollars.
03:46
But we're going to multiply by the quantity of the year that we're calculating.
04:02
So we get 500.
04:03
So now for the gdp deflator, we're going to put the nominal gdp over real gdp multiplied by 100...