(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In this part you are going to calculate the nominal and real GDP for Britannica for each of the three years.
(Description)
The economy of Britannica produces three goods: computers, Blu-rays, and pizzas. The accompanying table shows the prices and output of the three goods for the years 2012, 2013, and 2014. Table consists of 7 columns and 3 rows. Columns are as follows: 1 - year; 2 and 3 - price and quantity for computers, respectively; 4 and 5 - price and quantity for Blu-rays, respectively; 6 and 7 - price and quantity for pizzas. In 2012, the price of computers was 900 dollars, and the quantity was 10; the price of Blu-rays was 10 dollars and the quantity was 100; the price of pizzas was 15 dollars and the quantity was 2. In 2013, the price of computers was 1000 dollars, and the quantity was 10.5; the price of Blu-rays was 12 dollars and the quantity was 105; the price of pizzas was 16 dollars and the quantity was 2. In 2014, the price of computers was 1050 dollars, and the quantity was 12; the price of Blu-rays was 14 dollars and the quantity was 110; the price of pizzas was 17 dollars and the quantity was 3. Calculate nominal GDP in Britannica for each of the three years. What is the percent change in nominal GDP from 2012 to 2013 and from 2013 to 2014?
(Speaker)
We are going to start by calculating nominal GDP for 2012. To calculate nominal GDP, we simply add up the market value for each of the three goods. The market value of computers is found by multiplying the quantity of computers produced in 2012 by the price of computers in 2012.
(Description)
Market value of computers is presented: 900 dollars times 10, equals to 9000 dollars
(Speaker)
For Britannica, the market value of computers in 2012 is 900 dollars times 10, or 9000 dollars. Next we want to find the market value of Blu-rays.
(Description)
Market value of Blu-rays is presented: 10 dollars times 100, equals to 1000 dollars
(Speaker)
For Britannica, the market value of Blu-rays in 2012 is 10 dollars times 100, or 1000 dollars. Finally, in 2012 Britannica produced two pizzas at a price of 15 dollars, which is a market value of 15 dollars times 2
(Description)
Market value of pizzas is presented: 15 dollars times 2, equals to 30 dollars
(Speaker)
The final step to calculate nominal GDP is to add up the market values for the three goods.
(Description)
Nominal GDP in 2012 is presented as sum of 9000 dollars, 1000 dollars, and 30 dollars, equal to 10030 dollars.
(Speaker)
For 2012, the nominal GDP in Britannica is 9000 dollars plus 1000 dollars plus 30 dollars or 10030 dollars. Nominal GDP for 2013 is found in a similar manner.
(Description)
Market value of computers is presented: 1000 dollars times 10.5, equals to 1050 dollars.
Market value of Blu-rays is presented: 12 dollars times 105, equals to 1260 dollars.
Market value of pizzas is presented: 16 dollars times 2, equals to 32 dollars.
(Speaker)
In 2013, the market values of computers, Blu-rays, and pizzas are 10500 dollars, 1260 dollars, and 32 dollars. Adding these together, Britannica has a nominal GDP of 11792 dollars for 2013.
(Description)
Nominal GDP in 2013 is presented as sum of 10500 dollars, 1260 dollars, and 32 dollars, equal to 11792 dollars.
(Speaker)
Continuing with 2014, the market values of computers, Blu-rays, and pizzas are 12600 dollars, 1540 dollars, and 51 dollars.
(Description)
Market value of computers is presented: 1050 dollars times 12, equals to 12600 dollars.
Market value of Blu-rays is presented: 14 dollars times 110, equals to 1540 dollars.
Market value of pizzas is presented: 17 dollars times 3, equals to 51 dollars.
(Speaker)
Adding these together, Britannica has a nominal GDP of 14191 for 2014. The last step in the problem is to calculate the percent change in nominal GDP between 2012 and 2013 and between 2013 and 2014. You can see we added a column for nominal GDP corresponding to each year.
(Description)
New column with nominal GDP values - 10030 dollars for 2012, 11792 dollars for 2013, and 14191 dollars for 2014 - is added in the table.
(Speaker)
To calculate the percent change in nominal GDP from 2012 to 2013, we first take the difference between the nominal GDP in 2013 and 2012 which is 11972 dollars minus 10030 dollars and then divide by nominal GDP in 2012 or 10030 dollars.
(Description)
The percent change in nominal GDP from 2012 to 2013 is presented: fraction, 11792 dollars minus 10030 dollars in the numerator, 10030 dollars in the denominator, times 100, equals 17.6 percent.
(Speaker)
Doing so, we find that nominal GDP increased 17.6 percent. For 2014 the percent change in nominal GDP relative to 2013 is found by taking the difference in the nominal GDP for 2014 and 2013 which is 14191 dollars minus 11792 dollars and then dividing by the nominal GDP in 2013 11792 dollars. Doing so yields an annual growth rate of 20.3 percent.
(Description)
The percent change in nominal GDP from 2013 to 2014 is presented: fraction, 14191 dollars minus 11792 dollars in the numerator, 11792 dollars in the denominator, times 100, equals 20.3 percent.