# Year Price of pizzas Quantity of pizzas Price of calzones Quantity of calzones 2000 15 15 15 15...

## Question:

 Year Price of pizzas Quantity of pizzas Price of calzones Quantity of calzones 2000 15 15 15 15 2019 45 45 45 60

1. Calculate the real GDP for 2000.

2. Calculate the real GDP for 2019.

3. Calculate the growth in real output over the period.

## Real GDP:

Real GDP is the adjusted market value of all goods and services produced for the period. It takes into consideration the inflation or deflation of the economy that causes the price change.

Question 1:

Let us compute the real GDP in 2000. We assume that 2000 is the base year

{eq}Real\:GDP = Price\:of\:pizzas (base) \times Quantity+ Price\:of\:calzones (base) \times quantity {/eq}

{eq}Real\:GDP = 15\times 15 + 15\times 15 {/eq}

{eq}Real\:GDP = 225 + 225 = 450 {/eq}

#### Question 3:

Let us compute the growth rate of real output.

{eq}Growth = Real\:GDP\:in\:2019 \div Real\:GDP\:in\:2000 - 1 {/eq}

{eq}Growth = 1,575 \div 450- 1 {/eq}

{eq}Growth = 3.5 - 1 = 2.5 {/eq}

The growth rate is 250%.