Complete the following table for a given country and show how can you determine if the country faces an inflation in 2018? Nominal GDP2017 Nominal GDP2018 Real GDP2010 P P 4 2 3 4 3 4 3. 6. 2 3 GDP
Complete the following table for a given country and show how can you determine if the country faces an inflation in 2018? Nominal GDP2017 Nominal GDP2018 Real GDP2010 P P 4 2 3 4 3 4 3. 6. 2 3 GDP
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question

Transcribed Image Text:**Question 2**
Complete the following table for a given country and show how you can determine if the country faces an inflation in 2018?
| | Nominal GDP<sub>2017</sub> | | Nominal GDP<sub>2018</sub> | | Real GDP<sub>2018</sub> | |
|---------------|---------------------------|-----------------------------------|---------------------------|-----------------------------------|-------------------------|-----------------------------------|
| | Q | P | Q | P | Q | P |
| C | 4 | 2 | 3 | 4 | | |
| I | 3 | 3 | 4 | 3 | | |
| G | 6 | 2 | 5 | 3 | | |
| GDP | | | | | | |
**Explanation:**
- **Q** represents the quantity of goods and services.
- **P** represents the prices of those goods and services.
To determine if a country faces inflation in 2018, analyze the changes between the Nominal GDP and Real GDP. Inflation implies an increase in the general price level of goods and services.
1. **Calculate Nominal GDP:**
- For each year, multiply quantity (Q) by price (P) for each category (C, I, G) to find the GDP.
2. **Calculate Real GDP for 2018:**
- Use the prices (P) from 2017 and the quantities (Q) from 2018 to find Real GDP. This adjusts the GDP for inflation by removing the effect of price changes.
3. **Compare GDPs:**
- A rise in Nominal GDP that is not reflected in the Real GDP suggests inflation, as the increase in Nominal GDP is due to higher prices rather than increased production.
**Calculations:**
- For **2017**, calculate Nominal GDP:
- C: \( 4 \times 2 = 8 \)
- I: \( 3 \times 3 = 9 \)
- G: \( 6 \times 2 = 12 \)
- Total Nominal GDP<sub>2017</sub>: \( 8 + 9 + 12 = 29 \
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education