COST ACCOUNTING
PERFORMANCE MEASUREMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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. Using 2010 as a base year, calculate Utilistan’s real GDP for (real GDP = output in a particular year multiplied by the prices from the base year):
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250
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378
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240
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There is no way to determine an answer
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Explanation:
Detailed explanation-1: -Real GDP is equal to the sum of the base year price * current year quantity of all the goods.
Detailed explanation-2: -In the base year, year 1, real GDP equals nominal GDP equals $30 000. In year 2, we need to value year 2s output at year 1 prices. Year 2 real GDP = 25 * $1000 + 12 000 * $1.00 = $37 000. The percentage change in real GDP equals ($37 000-$30 000)/$30 000 = 23.3%.
Detailed explanation-3: -Real GDP is the gross domestic product and is measured with respect to a base year. It is adjusted to inflation and hence is also known as inflation-corrected GDP or current price.
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