Question

In the table for Problem 8-14, if 2020 is the base year, what is the price index for 2019? (Round decimal fractions to the nearest tenth.)

Short answer

If $2020$ is the base year, the price index for$2019$is$62451.4420$.

Step-by-step solution

Introduction

Changes in relative prices are measured in price index.

Nominal GDP is a measurement of economic output in a country that takes current prices into account.

Explanation

The base year is $2020$

Calculating the real GDP for the year $2019$

$$\begin{gathered} \Rightarrow (800\times 10)+(11\times 3000)+(150\times 500)+(10000\times 2) \\ =240331520000 \end{gathered}$$

we multiply quantity into the current year price to find nominal GDP.

Calculating the nominal GDP for the year $2019$

$\Rightarrow (1000\times 10)+(6\times 3000)+(100\times 500)+(1\times 10000)$

Step 3

Finding the price index for the year $2019$ , we have,

$$\begin{gathered} \Rightarrow \frac{NominalGDPfortheyear2019}{RealGDPfortheyear2019}\times 100 \\ =\frac{150090500010000}{240331520000}\times 100 \\ =62451.4420 \end{gathered}$$