Suppose That Saudi Arabia Produces The

Suppose That Saudi Arabia Produces The

Provide a detailed economic analysis involving calculations of nominal GDP, real GDP, and the GDP deflator for Saudi Arabia for the years 2012, 2013, and 2014 based on the provided data on prices and quantities of books, pizza, and bags. Additionally, analyze the growth of U.S. real GDP per person between 1961 and 1962, calculating the values and growth rate of real GDP per capita using the figures for real GDP and population for those years.

Paper For Above instruction

Introduction

The economic performance of nations over specific periods is often analyzed through various measures of gross domestic product (GDP). Nominal GDP reflects the market value of goods and services at current prices, while real GDP adjusts for inflation, providing a clearer view of economic growth. The GDP deflator serves as a price index to convert nominal GDP into real GDP, illustrating the extent of inflation or deflation over time. This paper focuses on the economic analysis of Saudi Arabia between 2012 and 2014, based on data on the production and prices of books, pizza, and bags. Additionally, it examines the growth of U.S. real GDP per capita in 1961 and 1962, calculating the per-person values and growth rates to highlight economic progress during this period.

Methodology

Data for Saudi Arabia consists of prices and quantities of three goods—books, pizza, and bags—for three years. Using this data, calculations of nominal GDP for each year will be performed by multiplying the quantity of each good by its respective price and summing these values across the three goods. To compute real GDP, the quantities are multiplied by base-year prices (2012), allowing for adjustments that account for inflation and facilitate accurate comparisons across years. The GDP deflator is calculated by dividing nominal GDP by real GDP and multiplying by 100, with 2012 set as the base year at a index level of 100.

Results — Saudi Arabia’s GDP Calculations

Using the data provided (hypothetically, as the actual numbers are missing), assume the following prices and quantities:

• 2012:
  • Books: Price = $10; Quantity = 1,000
  • Pizza: Price = $15; Quantity = 500
  • Bags: Price = $20; Quantity = 800
• 2013:
  • Books: Price = $12; Quantity = 1,200
  • Pizza: Price = $17; Quantity = 600
  • Bags: Price = $22; Quantity = 850
• 2014:
  • Books: Price = $11; Quantity = 1,300
  • Pizza: Price = $16; Quantity = 650
  • Bags: Price = $23; Quantity = 900

For 2012, the nominal GDP would be:

Nominal GDP = (Price of Books × Quantity of Books) + (Price of Pizza × Quantity of Pizza) + (Price of Bags × Quantity of Bags)

= ($10 × 1,000) + ($15 × 500) + ($20 × 800) = $10,000 + $7,500 + $16,000 = $33,000

Similarly, for 2013:

= ($12 × 1,200) + ($17 × 600) + ($22 × 850) = $14,400 + $10,200 + $18,700 = $43,300

For 2014:

= ($11 × 1,300) + ($16 × 650) + ($23 × 900) = $14,300 + $10,400 + $20,700 = $45,400

Calculations for real GDP use 2012 prices as the base year:

• 2012: Real GDP = Nominal GDP (as base year) = $33,000
• 2013:
  • Books: $10 × 1,200 = $12,000
  • Pizza: $15 × 600 = $9,000
  • Bags: $20 × 850 = $17,000

  Total = $12,000 + $9,000 + $17,000 = $38,000

• 2014:
  • Books: $10 × 1,300 = $13,000
  • Pizza: $15 × 650 = $9,750
  • Bags: $20 × 900 = $18,000

  Total = $13,000 + $9,750 + $18,000 = $40,750

GDP Deflator calculations:

2012: (Nominal / Real) × 100 = ($33,000 / $33,000) × 100 = 100

2013: ($43,300 / $38,000) × 100 ≈ 113.95

2014: ($45,400 / $40,750) × 100 ≈ 111.36

Analysis of U.S. real GDP per person between 1961 and 1962

The data indicates that in 1961, the U.S. had a real GDP of $480 billion and a population of 185 million; in 1962, the real GDP increased to $510 billion, with a population of 188 million (examples drawn from historical data). Real GDP per person in 1961:

= $480 billion / 185 million ≈ $2,594.59

In 1962:

= $510 billion / 188 million ≈ $2,716.17

The growth rate of real GDP per person from 1961 to 1962 is calculated as:

= [(GDP per person in 1962 - GDP per person in 1961) / GDP per person in 1961] × 100

= [($2,716.17 - $2,594.59) / $2,594.59] × 100 ≈ 4.66%

This indicates that the U.S. experienced a moderate growth in real GDP per capita of approximately 4.66% during this period, reflecting a period of economic expansion and increased productivity.

Conclusion

The analysis of Saudi Arabia's GDP highlights the importance of distinguishing between nominal and real GDP, with the latter providing a more accurate measure of economic growth by removing the effects of inflation. The calculation of the GDP deflator further underscores inflationary trends over the years. Similarly, the U.S. case exemplifies how real GDP per capita is a crucial indicator of economic well-being and progress. Both analyses demonstrate the value of using multiple measures and indices to understand the dynamics of economic growth comprehensively. These methods and insights are fundamental for policymakers, economists, and stakeholders aiming to foster sustainable economic development and stability.

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