Economics: The Basics 1st Edition by Mike Mandel

Exercise 1

Suppose we are looking at an economy that produces only toys. In 2006 the country's toy factories produced 5 million toys, which it sold on the international market for $10 per toy. In 2006 the country produced 6 million toys, which it sold for $12 per toy.
a) What was the percentage increase in the production of toys from 2005 to 2006?
b) What was the gross domestic product of this economy in 2005? What was the gross domestic product in 2006? (Remember that GDP is the monetary value of the economy's output, valued at the market price.)c) What was the percentage increase in nominal GDP?
d) What was the growth rate of the economy from 2005 to 2006? Explain.