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Concept Introduction:
The formula to calculate the value of GDP is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 12P , additional homework tip 1](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-12p_1.png)
Here,
- C is consumption spending.
- I is investment spending.
- G is government purchases.
- X is export.
- M is import.
GDP Deflator: It is one of the tools that help in measurement of price level of the gross domestic product with the help of real and nominal GDP.
The formula to calculate GDP Deflator is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 12P , additional homework tip 2](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-12p_2.png)
Inflation: When the aggregate price level in an economy accelerates continuously for a span of time then it is referred to be inflation.
The formula to calculate inflation is,
![MACROECONOMICS IN MODULES, Chapter 7, Problem 12P , additional homework tip 3](https://content.bartleby.com/tbms-images/9781319098759/Chapter-7/images/html_98759-7-12p_3.png)
Here,
- n is the present year.
is the previous year.
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Chapter 7 Solutions
MACROECONOMICS IN MODULES
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