Consider the following data on U.S. GDP: Year Nominal GDP in billions of dollars) GDP Deflator (base year 2009) 2014 17,419 108.3 1994 7,309 73.8 a. What was the growth rate of nominal GDP between 1994 and 2014? ( Hint: The growth rate of a variable X over an N-year period is calculated as 100 × [(X final /X initial ) 1/N – 1].) b. What was the growth rate of the GDP deflator between 1994 and 2014? c. What was real GDP in 1994 measured in 2009 prices? d. What was real GDP in 2014 measured in 2009 prices? e. What was the growth rate of real GDP between 1994 and 2014? f. Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.

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Principles of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305585126
BuyFind

Principles of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305585126

Solutions

Chapter
Section
Chapter 23, Problem 7PA
Textbook Problem

Consider the following data on U.S. GDP:

Year Nominal GDP in billions of dollars) GDP Deflator (base year 2009)
2014 17,419 108.3
1994 7,309 73.8
  1. a. What was the growth rate of nominal GDP between 1994 and 2014? (Hint: The growth rate of a variable X over an N-year period is calculated as 100 × [(Xfinal/Xinitial)1/N – 1].)

    b. What was the growth rate of the GDP deflator between 1994 and 2014?

    c. What was real GDP in 1994 measured in 2009 prices?

    d. What was real GDP in 2014 measured in 2009 prices?

    e. What was the growth rate of real GDP between 1994 and 2014?

    f. Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.

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