Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 23 - Part VIII - Measuring a Nation's Income - Questions for Review: 7

Answer

Nominal GDP: [2013] - 200 dollars; [2014] - 600 dollars Nominal GDP rises by 200% from 2013 to 2014 Real GDP: [2013] - 200 dollars; [2014] - 400 dollars Real GDP rises by 100% from 2013 to 2014 GDP Deflator: [2013] - 100; [2014] - 150 GDP Deflator rises by 50% from 2013 to 2014

Work Step by Step

Nominal GDP for 2013: 100 loaves for 2 dollars each = 100 * 2 = 200 dollars Nominal GDP for 2014: 200 loaves for 3 dollars each = 200 * 3 = 600 dollars Nominal GDP rises by: ((600-200)/200) * 100 = 200% Real GDP for 2013: 100 loaves for 2 dollars each = 100 * 2 = 200 dollars Real GDP for 2014: 200 loaves for 2 dollars each (base year price) = 200 * 2 = 400 dollars Real GDP rises by: ((400-200)/200) *100 = 100% GDP Deflator for 2013: (200/200) * 100 = 100 GDP Deflator for 2014: (600/400) * 100 = 150 GDP Deflator rises by: ((150-100)/100) * 100 = 50%
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.