(a)
Identify the 2013 and 2014 real
(a)
Explanation of Solution
Table-1 shows the value of nominal GDP and the GDP deflator as follows:
Table-1 | ||||
Nominal GDP (Billions of currency) |
GDP deflator (2010=100) | |||
Country | 2013 | 2014 | 2013 | 2014 |
U | 16,663.2 | 17,348.1 | 105.6 | 107.4 |
C | 1,879.5 | 1,976.2 | 108.1 | 110.9 |
J | 482,430 | 489,623 | 97.2 | 98.8 |
I | 1,609.5 | 1,616.3 | 103.9 | 105 |
A | 1,554.8 | 1,599.8 | 105.5 | 105.8 |
UK | 1,713.1 | 1,791.5 | 104.3 | 106 |
The real GDP can be calculated using the formula as follows:
Use Equation-1 to calculate the real GDP of Country U in 2013 as follows:
Therefore, the real GDP of Country U in 2013 is $15,779.54 billion.
Table-2 shows the value of the real GDP in 2013 and 2014, which is calculated using Equation-1 as follows:
Table-2 | ||||||
Nominal GDP | GDP deflator | Real GDP | ||||
Country | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 |
U | 16,663.2 | 17,348.1 | 105.6 | 107.4 | 15,779.5 | 16,152.8 |
C | 1,879.5 | 1,976.2 | 108.1 | 110.9 | 1,738.67 | 1,781.97 |
J | 482,430 | 489,623 | 97.2 | 98.8 | 496,327 | 495,570 |
I | 1,609.5 | 1,616.3 | 103.9 | 105 | 1,549.09 | 1,539.33 |
A | 1,554.8 | 1,599.8 | 105.5 | 105.8 | 1,473.74 | 1,512.10 |
UK | 1,713.1 | 1,791.5 | 104.3 | 106 | 1,642.47 | 1,690.09 |
(b)
Identify the inflation rate in 2014.
(b)
Explanation of Solution
The inflation rate in 2014 can be calculated using the formula as follows:
Use Equation-2 to calculate the inflation rate of Country U in 2014 as follows:
Therefore, the inflation rate is 1.70%.
Table-3 shows the value of the inflation rate, which is calculated using Equation-2 as follows:
Table-3 | |||||||
Nominal GDP | GDP deflator | Real GDP | Inflation rate | ||||
Country | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2014 |
U | 16,663.2 | 17,348.1 | 105.6 | 107.4 | 15,779.5 | 16,152.8 | 1.70% |
C | 1,879.5 | 1,976.2 | 108.1 | 110.9 | 1,738.67 | 1,781.97 | 2.59% |
J | 482,430 | 489,623 | 97.2 | 98.8 | 496,327 | 495,570 | 1.65% |
I | 1,609.5 | 1,616.3 | 103.9 | 105 | 1,549.09 | 1,539.33 | 1.06% |
A | 1,554.8 | 1,599.8 | 105.5 | 105.8 | 1,473.74 | 1,512.1 | 0.28% |
UK | 1,713.1 | 1,791.5 | 104.3 | 106 | 1,642.47 | 1,690.09 | 1.63% |
(c)
Identify the country that has the highest growth rate of real GDP.
(c)
Explanation of Solution
The growth rate can be calculated using the formula as follows:
Use Equatrion-3 to calculate the growth rate of real GDP as follows:
Therefore, the growth rate of real GDP is 2.36%.
Table-4 shows the growth rate in 2014, which is calculated using the Equation-3 as follows:
Table-4 | ||||||||
Nominal GDP | GDP deflator | Real GDP | Inflation rate | Growth rate | ||||
Country | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2014 | 2014 |
U | 16,663.2 | 17,348.1 | 105.6 | 107.4 | 15,779.5 | 16,152.8 | 1.70% | 2.37% |
C | 1,879.5 | 1,976.2 | 108.1 | 110.9 | 1,738.67 | 1,781.97 | 2.59% | 2.49% |
J | 482,430 | 489,623 | 97.2 | 98.8 | 496,327 | 495,570 | 1.65% | -0.15% |
I | 1,609.5 | 1,616.3 | 103.9 | 105 | 1,549.09 | 1,539.33 | 1.06% | -0.63% |
A | 1,554.8 | 1,599.8 | 105.5 | 105.8 | 1,473.74 | 1,512.1 | 0.28% | 2.60% |
UK | 1,713.1 | 1,791.5 | 104.3 | 106 | 1,642.47 | 1,690.09 | 1.63% | 2.90% |
According to Table-4, Country UK has the highest growth rate of real GDP, which is 2.90% and Country J has the lowest growth rate of real GDP, which is -0.15%.
(d)
Identify the countries that have the highest and lowest inflation rate.
(d)
Explanation of Solution
According to Table-3, Country C has the highest inflation rate, which is 2.59% and Country A has the lowest inflation rate, which is 0.28%.
(e)
Identify the country that has the most inflation
(e)
Explanation of Solution
According to the data from Table-4, Country C has the highest inflation rate, which is 2.59%. Therefore, Country C has the most inflation during 2014.
Inflation: Inflation is a sustained rise in the price level of a selected basket of goods and service for a particular period.
Want to see more full solutions like this?
Chapter 8 Solutions
Economics: Private and Public Choice (MindTap Course List)
- Why might even real GDP be a misleading index of changes in output between 1950 and 2015 in the United States?arrow_forwardThe following table shows the outputs and prices of three products produced by an economy in 2018, 2019 and 2020. (i) Measure the nominal GDP, the real GDP and the GDP deflator in 2019 and 2020, taking 2018 as the base year.(ii) Using the GDP deflator, measure the inflation rate in the economy between 2018 and 2019, and also between 2019 and 2020. (iii) Assume all household consumption items are locally produced as shown in the table in Question (a). A typical household in the economy consumes 5 units of rice, 4 units of shirt and 2 units of shoes in 2018. Using 2018 as the base year, measure the CPI for 2019 and 2020 and the inflation rate between 2018 and 2019, and also between 2019 and 2020. Explain why the inflation rate is different from those computed from (a)(ii).arrow_forwardBased on the above table what was the real GDP in 2008? Select one: a. $5677.72 b. $4133.58 c. $13,312.50 d. $21,168.4arrow_forward
- Suppose that nominal GDP was $9250000.00 in 2005 in Orange County California. In 2015, nominal GDP was $12000000.00 in Orange County California. The price level rose 2.00% between 2005 and 2015, and population growth was 3.25%. Calculate the following figures for Orange County California between 2005 and 2015. Give all answers to two decimals. a. Nominal GDP growth was b. Economic growth was %. c. Inflation was d. Real GDP growth was e. Per capita GDP growth was f. Real per capita GDP growth wasarrow_forward21 Macroeconomic Information for Mexico: 2020 Q2 GDP (in 2020 Q2 pesos) 4.97 trillion pesos 2020 Q1 GDP (in 2020 Q1 pesos) 6.09 trillion pesos 2020 Q2 GDP (in 2015 pesos) 3.76 trillion pesos 2020 Q1 GDP (in 2015 pesos) 4.54 trillion pesos Calculate Mexico's inflation, using the GDP deflator method, between the first and second quarters of 2020. (Enter your answer in percent form, rounded to one decimal place, without the percent sign. For example, if your answer is 0.12345, enter 12.3.)arrow_forwardThe table below presents a brief summary of City A’s total spending, local GDP, and population changes. Read the table and answer the following questions. 2010 2020 Total spending ($ million) 89 104.12 Local GDP ($ millions) 110 134 Population 50,000 56,275 CPI deflators (2012=1) 0.96 1.05 Calculate % change for City A’s total spending from 2010 to 2020 in current dollars. *Results round to the nearest 2 decimal places. Calculate % change for City A’s total spending from 2010 to 2020 in constant dollars. *Results round to the nearest 2 decimal places. Why does % change calculated from constant dollars differ from % change calculated from current dollar? Calculate per capita spending in 2010 and 2020, respectively, using constant dollars. *Results round to the nearest dollar. 2010 per capita spending: 2020 per capita spending: Calculate the compound annual growth rate of per capita spending from 2010 to 2020…arrow_forward
- (a) Use the following table to calculate GDP price deflator in 2019 and 2020 and the change in the overall price level from 2019 to 2020. You will need to round your answer to the nearest whole number. GDP 2019 2020 Nominal GDP $26 000 $28 000 Real GDP $21 000 $22 000 (b) Consider an economy only producing two goods: pen and bread in both Year 1 and Year 2. Can the Real GDP of this economy increase between Year 1 and Year 2, while the Nominal GDP decreases or remains the same? Explain your answer with a numerical example.arrow_forwardThe following table gives nominal and real GDP for an economy for two years.arrow_forwardWhat is the difference between using a measure of inflation such as the consumer prices index (CPI) and the GDP deflator? Which do you think is the more accurate measure of price changes in an economy?arrow_forward
- iginal. The following table gives a country Nominal GDP for 2021 and 2022 in billions of US dollars: GDP, Nominal GDP Deflator (2016 = 1.0) 2021 2022 1,889 0.985 1,961 1.000 a. Calculate real GDP for 2021 and 2022, using the given GDP deflator. b. Calculate the growth rate of real GDP between 2021 and 2022? Show your work. c. Calculate the inflation rate for 2021-2022 based on the GDP deflator.arrow_forwardFrance produces two goods: milk and wheat. Below is a table showing prices and quantities of output for three years: Year Price of milk Quantity of milk Price of wheat Quantity of wheat 2019 €1 200 €2.9 300 2020 €1.2 250 €3 330 2021 €1.4 280 €3.2 375 The nominal GDP for 2021 is Assuming 2019 to be the base year, the real GDP for 2021 is GD deflator for 2021 is a) France's Office of National Statistics decides to determine the following representative bundle of goods and services purchased by a typical consumer: 5 milk products and 4 wheat products. The CPI in 2021 (assume 2019 to be the base year) is The yearly inflation rate for 2021 isarrow_forwardSolve the attachement.arrow_forward
- Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning