Macroeconomics
4th Edition
ISBN: 9780393602487
Author: Jones, Charles I.
Publisher: W. W. Norton & Company
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Chapter 2, Problem 6E
To determine
Illustrate the missing real GDP in 2018 and 2020
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Calculate the inflation rate using the GDP deflator based on the Laspeyres, Paasche, and chain- weighted indexes of GDP (use the approximate formula).
Consider the data for a known country for the consumer price index (CPI), by components:(base year 2015 = 100)
a) Interpret the value of the CPI index in December 2018.
b) Calculate the year-on-year inflation rate corresponding to the CPI, in December 2018.
c) Suppose the GDP Deflator in 2020 is predicted to be 1.09. What can be interpreted?
A country produces only sugar and wheat in the quantities and prices listed below. The GDP deflator is given by Nominal GDP/Real GDP *100.
If 2018 is the base year,
i. What is the GDP deflator for years 2019 and 2020? Show your workings
ii. What is the inflation rate year 2019-2020? Show your workings
Year
Price of sugar
Quantity of sugar
Price of wheat
Quantity of wheat
2018
$2.00
200
$10
40
2019
$2.30
250
$14
50
2020
$2.75
280
$18
80
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- Nominal GDP in Nowhereland in 2018 and 2019 is as follows: Can you say that the production of goods and services in Nowhereland has increased between 2018 and 2019? Why or why not?arrow_forwardWhy might even real GDP be a misleading index of changes in output between 1950 and 2015 in the United States?arrow_forwardUsing the GDP Deflator calculate the average annual inflation rate that the U.S. experienced over the period beginning with the year of 1998 and ending with 2020. (Note: you do not use the inflation rate as the data you plug into the formula. Rather, you calculate an inflation rate by using the formula.) GDP Deflator: price index in 1998 is 75.3, in 2020 is 113.6 inflation rate in 1998 is 1.1, in 2020 is 1.2 nominal interest rates in 1998 is 6.53, in 2020 is 2.48 Real interest rates in 1998 is 5.41, in 2020 is 1.27arrow_forward
- The following table gives nominal and real GDP for an economy for two years. Based on the table, in Year 2, the value of the GDP deflator is Year 1 1430.0 1,300 Nominal GDP Real GDP (Round your answer to one decimal place.) The inflation rate between Year 1 and Year 2 is %. (Round your answer to one decimal place.) Year 2 1820.0 1560.0arrow_forward1) If nominal GDP is $7636.0 billion and the GDP deflator is 130.2, then what is real GDP? 2) If the Consumer Price Index rose from 166.3 in 1985 to 380.1 in 2010, what would be the inflation rate over this period?arrow_forwardGross domestic product (GDP) is a measure of the market value of final goods and services produced within the borders of a country during a specific time period, usually a year. What is the GDP deflator? How does the GDP deflator relate to real GDP? Review GDP and nominal versus real. Real adjusts for inflation, so how do we arrive at the real GDP number from nominal GDP? Review the GDP deflator formula, where GDP deflator = (Nominal GDP/Real GDP) X 100.arrow_forward
- Calculate the change in price level in 2019 compared to 2009 using GDP deflator. Show calculations.arrow_forwardWhat is the difference between using a measure of inflation such as the consumer prices index (CPI) and the GDP deflator? Which do you think is the more accurate measure of price changes in an economy?arrow_forwardSaved Help Save & Exit Submit Drake believes that over the past year, the economy is experiencing rapid inflation, while Pedro says that the economy actually experienced disinflation during this period. The easiest way to settle their argument is to look at GDP figures for the past year. True or False True Falsearrow_forward
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