(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.
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Chapter 8 Solutions
Economics: Private and Public Choice
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