5. Problems and Applications Q6 Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 2 bars and the price is $5. In year 2, the quantity produced is 4 bars and the price is $8. In year 3, the quantity produced is 6 bars and the price is $10. Using year 1 as the base year, compute nominal GDP, real GDP, and the GDP deflator for each year. Nominal GDP Real GDP (Dollars) GDP Deflator 100 160 200 Year (Dollars) Year 1 10 10 32 60 20 30 Year 2 Year 3 The percentage growth rate of real GDP from year 2 to year 3 is 67% The inflation rate as measured by the GDP deflator from year 2 to year 3 is 80%
5. Problems and Applications Q6 Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 2 bars and the price is $5. In year 2, the quantity produced is 4 bars and the price is $8. In year 3, the quantity produced is 6 bars and the price is $10. Using year 1 as the base year, compute nominal GDP, real GDP, and the GDP deflator for each year. Nominal GDP Real GDP (Dollars) GDP Deflator 100 160 200 Year (Dollars) Year 1 10 10 32 60 20 30 Year 2 Year 3 The percentage growth rate of real GDP from year 2 to year 3 is 67% The inflation rate as measured by the GDP deflator from year 2 to year 3 is 80%
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
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Transcribed Image Text:5. Problems and Applications Q6
Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 2 bars and the price is $5. In year 2, the quantity
produced is 4 bars and the price is $8. In year 3, the quantity produced is 6 bars and the price is $10.
Using year 1 as the base year, compute nominal GDP, real GDP, and the GDP deflator for each year.
Nominal GDP
Real GDP
Year
(Dollars)
(Dollars)
GDP Deflator
Year 1
10
10
100
Year 2
32
20
160
Year 3
60
30
200
The percentage growth rate of real GDP from year 2 to year 3 is
67%
The inflation rate as measured by the GDP deflator from year 2 to year 3 is
80%
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