Macroeconomics: Private and Public Choice
15th Edition
ISBN: 9781305176799
Author: Gwartney
Publisher: Cengage
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Chapter 7, Problem 5CQ
To determine
Explain the reason for the real
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- List some of the reasons why economists should not consider GDP an effective measure of the standard of living in a county.arrow_forwardWhy could calculating GDP each year using current prices overstate or understate changes in actual output year to year?arrow_forwardIn the US, the Bureau of Economic Analysis (BEA) reports the following information about the US economy for the years 2010 - 2016. All dollar figures are in trillions and have been rounded to the nearest trillion. Some entries are missing from the table. Let's see if you can figure out one of these missing values. 2010 2011 2012 2013 2014 2015 2016 Current-dollar GDP 15.0 15.5 16.2 16.8 17.5 18.2 18.7 GDP in chained 2012 dollars 15.8 16.5 16.9 17.7 chained growth rate of GDP (%) 2.6 1.6 2.5 2.9 1.6 What was real GDP in 2015? a) 16.9 x 1.029 = 17.4b) 16.9 x 1.025 = 17.3c) (16.9 + 17.7)/2 = 17.3d) 17.5 x 1.029 = 18.0arrow_forward
- Are there problems with GDP that should be fixed?arrow_forwardHey, I need help with the following problem divided into seven smaller parts: Calculate nominal GDP for 2011 and 2012. Using 2011 as the base year, calculate real GDP for 2011 and 2012. Based on your answer from part (b), by what percentage did real GDP grow between 2011 and 2012? Now, calculate real GDP for 2011 and 2012 using 2012 as the base year. Based on your answer from part (d), by what percentage did real GDP grow between 2011 and 2012? Using 2011 as the base year, what was the GDP deflator in 2011 and 2012? Based on your answer from part (f), by what percentage did prices change between 2011 and 2012? Thank you in advance!arrow_forwardIf nominal GDP rose, does that mean that production had to increase as well? Why or why not? What about if real GDP increased? Why is it important to use real GDP when comparing changes over time?arrow_forward
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