Tackle the Test: Free-Response Questions

1. Question

   The economy of Britannica produces three goods: computers, DVDs, and pizza. The accompanying table shows the prices and output of the three goods for the years 2012 and 2014.

   
   

   
   

   
   

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	Computers		DVDs		Pizza
   Year	Price	Quantity	Price	Quantity	Price	Quantity
   2012	$900	10	$10	100	$15	2
   2014	1,050	12	14	110	17	3

   
   

   
   

   
   

   1. Calculate the nominal GDP in Britannica for 2012.

      
      
   
   

   2. Calculate the real GDP in Britannica for 2012 using 2012 as the base year.

      
      
   
   

   3. Calculate the real GDP in Britannica for 2014 using 2012 as the base year.

      
      
   
   

   Rubric for FRQ 1 (3 points)

   1 point: ($900 × 10) + ($10 × 100) + ($15 × 2) = $9,000 + $1,000 + $30 = $10,030

   1 point: Real GDP equals nominal GDP in the base year, so this answer is the same as in part a.

   1 point: ($900 × 12) + ($10 × 110) + ($15 × 3) = $10,800 + $1,100 + $45 = $11,945

2. Question

   The country of Hungry produces only pizzas and the country of Thirsty produces only smoothies. Use the information in the table below to answer the following questions:

   
   

   
   

   1. Calculate the number of pizzas made in Hungry and the number of smoothies made in Thirsty in each year.

      
      
   
   

   2. Calculate the real GDP in each country in year 2 using year 1 prices.

      
      
   
   

   3. In which country did real GDP increase the most between year 1 and year 2?

      
      
   
   

   4. In which country did real GDP per capita decrease the most between year 1 and year 2? Show your work. (6 points)

      
      
   
   

   
   

   
   

   
   

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   	Nominal GDP	Price	Population
   Hungry
   Year 1	$10,000	$10	5
   Year 2	20,000	10	16
   Thirsty
   Year 1	$10,000	$10	5
   Year 2	30,000	20	10

   
   

   Rubric for FRQ 2 (6 points)

   1 point: Hungry—1,000, 2,000 (In Year 1, Hungry made $10,000/$10 = 1,000 pizzas. In Year 2, Hungry made $20,000/$10 = 2,000 pizzas.)

   1 point: Thirsty—1,000, 1,500 (In Year 1, Thirsty made $10,000/$10 = 1,000 smoothies. In Year 2, Thirsty made $30,000/$20 = 1,500 smoothies.)

   1 point: Hungry—The real GDP in Hungry in Year 2 is $10 × 2,000 = $20,000.

   1 point: Thirsty—The real GDP in Thirsty in Year 2 is $10 × 1,500 = $15,000.

   1 point: Hungry—The increase of $10,000 or 100% in Hungry exceeded the increase of $5,000 or 50% in Thirsty.

   1 point: Hungry—In Year 1, the real GDP per capita was $10,000/5 = $2,000 in each country. In Year 2, the real GDP per capita in Hungry was $20,000/16 = $1,250 and the real GDP per capita in Thirsty was $15,000/10 = $1,500. Thus, the decrease of $750 in Hungry exceeded the decrease of $500 in Thirsty.