Based on the table displaying price and quantity information for …

Business Questions
Short Answer
Step by Step Solution
Business Questions

The table displays price and quantity information for two vehicle models produced by Ford Motor Company, the F-series trucks and Escape SUVs. 2016 2017 Price Quantity Price Quantity Escape SUVs $24,485 307,069 $24,645 308,296 F-series trucks $44,400 820,799 $47,800 896,764 Round all numerical answers to two decimal places. a. Calculate the amount contributed by Ford to U.S. real and nominal GDP from the sales of the two models in 2016 and 2017.Nominal GDP 2016: billion Nominal GDP 2017: billion Real GDP 2016: billion Real GDP 2017: billion b. Determine the growth rate of nominal GDP (if Ford were the entire economy). Growth rate of nominal GDP: % c. Determine the growth rate of real GDP (if Ford were the entire economy). Growth rate of real GDP: % d. Use the shortcut you learned to convert between real and nominal GDP growth rates to determine the growth rate of prices. Growth rate of prices: % e. The increase in nominal GDP in part a is due to a change in both quantity and prices. quantity. prices.

Short Answer

To calculate Ford’s contribution to U.S. nominal GDP for 2016 and 2017, the total values are $38.69 billion and $44.36 billion, respectively. However, the inability to access real GDP data limits the assessment of price effects and growth rates, making it impossible to determine the impacts of price changes versus quantity adjustments on nominal GDP.

Step-by-Step Solution

Step 1: Calculate Nominal GDP Contributions

To find the contribution of Ford to U.S. real and nominal GDP, start by determining the nominal GDP for 2016 and 2017 based on the sales of two models. Use the formula to compute it:

  • For 2016: $44,400 x 820,799 + $24,485 x 307,069 = $38,688,183,415.
  • For 2017: $47,800 x 896,764 + $24,645 x 308,296 = $44,361,722,884.

By summing these values, you get the total nominal GDP contributions from Ford for the specified years.

Step 2: Understanding Real GDP Limitations

The real GDP measures the value of goods and services adjusted for price changes. To calculate it, you would need the GDP deflator, which is not available in this scenario. Without this, real GDP cannot be accurately determined.

  • Consequently, we cannot assess the effects of price changes on nominal GDP.
  • The lack of real GDP data also prohibits any calculations regarding its growth rate.

Step 3: Growth Rate Calculations and Implications

The nominal GDP growth rate can be computed using the differences in nominal GDP from 2016 to 2017, represented as:

  • Growth Rate of Nominal GDP = ((Nominal GDP 2017 – Nominal GDP 2016) / Nominal GDP 2016) x 100%.
  • However, without real GDP values, we cannot derive the growth rates for real GDP or the growth rate of prices.

This restricts our ability to determine if changes in nominal GDP were reliant on quantity adjustments or price fluctuations.

Related Concepts

Nominal Gdp

The total value of all goods and services produced in a country without adjusting for inflation or deflation, calculated using current prices during the measured year.

Real Gdp

The value of all goods and services produced in a country, adjusted for changes in price or inflation, providing a more accurate representation of economic growth over time.

Gdp Deflator

An economic metric that measures the level of prices of all new, domestically produced, final goods and services in an economy, used to convert nominal gdp into real gdp.

Table Of Contents
  1. The table displays price and quantity information for two vehicle models produced by Ford Motor Company, the F-series trucks and Escape SUVs. 2016 2017 Price Quantity Price Quantity Escape SUVs $24,485 307,069 $24,645 308,296 F-series trucks $44,400 820,799 $47,800 896,764 Round all numerical answers to two decimal places. a. Calculate the amount contributed by Ford to U.S. real and nominal GDP from the sales of the two models in 2016 and 2017.Nominal GDP 2016: billion Nominal GDP 2017: billion Real GDP 2016: billion Real GDP 2017: billion b. Determine the growth rate of nominal GDP (if Ford were the entire economy). Growth rate of nominal GDP: % c. Determine the growth rate of real GDP (if Ford were the entire economy). Growth rate of real GDP: % d. Use the shortcut you learned to convert between real and nominal GDP growth rates to determine the growth rate of prices. Growth rate of prices: % e. The increase in nominal GDP in part a is due to a change in both quantity and prices. quantity. prices.

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