In 2020, the total output was 19.45 million baskets of food, with a price of $1,700 per basket.

In 2021, the total output was 20.35 million baskets of food, with a price of $1,750 per basket.

Use 2020 as the base year.

a)     What were the amounts of nominal GDP in 2020 and in 2021? What was the total growth from 2020 to 2021?  

b)     What were the amounts of real GDP in 2020 and 2021? What was the total growth from 2020 to 2021?


Unemployment and population figures from fictitious country Fiestaland (all figures in 1000s):


Employed in full-time jobs=432

Employed in part-time jobs=124

Unemployed, actively searching for work=43

Unemployed, NOT actively searching for work (discouraged)=16

Total Population=1186

Assume that the natural rate of unemployment in Fiestaland is 5 percent.

a)     What is the size of the work force in Fiestaland?

b)     What is the unemployment rate in Fiestaland?

c)      According to Okun's law, what is the GDP gap as a percentage of potential GDP? Clearly indicate whether this is a recessionary, negative output gap or an inflationary, positive output gap.

Answer rating: 100% (QA)

a Nominal GDP in 2020 1945 million baskets x 1700 per basket 33015 billion Nominal GDP in 2021 2035 ... View the full answer