A country reported a nominal GDP of $115 billion in 2010 and $125 billion in 2009...

A country reported a nominal GDP of $115 billion in 2010 and $125 billion in 2009 and reported a GDP deflator of 85 in 2010 and 100 in 2009. What happened to real output and prices from 2014 to 2015? Please explain.

Expert Solution

According to the question in the year 2009, the Nominal GPD is equal to the Real GDP meaning that there is no inflation in that time period. This means that the real output and price level in that year is equal to the nominal level of output (real output adjusted for inflation) and the same is with price level, one reason behind this could be that 2009 is taken as the base year or inflation is same as it was in the base year. In the year 2010 the Real GDP is greater than Nominal GDP, this happens in very rare cases such as a Deflationary period (for example, the USA depression where, rather than prices rising , the general price level of goods and services decreased and causing a deflation, in the US between 1930-1933). Here the real output is valued more than nominal output because there is negative percentage of inflation or in other terms deflation, same with real price level, it would be higher than nominal price level.

Assuming that the country has gotten out of the deflation, then the real output and price level would be lesser in value to nominal output and price level as they would both be adjusted for inflation from the base year, same for nominal GDP ( it would be higher than Real GDP). If the country is still in a deflationary period then the same would happen as it did in 2010, the real GDP, output and price level would be higher than the nominal GDP, output and price level.

Rahul Sunny answered 10 months ago

Suppose that in year 1 nominal GDP for a country is $5,200 billion. The GDP price...

Suppose that in year 1 nominal GDP for a country is $5,200 billion. The GDP price index is 114.9, and the population is 100 million. In year 1, the real wage averages $18 per hour and workers work 35 hours per week. In year 2, this country's nominal GDP is $5,800 billion. The GDP price index is 115.1, and the population is now 105 million. Assume that in year 2 the real wage averages $18 per hour and workers work...

Assume that in 2018 the nominal GDP was $8,000 billion and in 2019 the nominal GDP...

Assume that in 2018 the nominal GDP was $8,000 billion and in 2019 the nominal GDP was $8,500 billion. Based on this information can we make any meaningful comparison of the economy’s performance? Would the value of automobile production in 2019 in the U.S. by a Korean auto company be counted in the U.S.’s GDP for the Year 2019? Briefly explain. If you purchased $10,000 of Google stock in 2019, would that purchase be included in GDP statistics for 2019?...

Let assume that nominal GDP in 2010 increased by 6% (over its previous level in 2009)....

Let assume that nominal GDP in 2010 increased by 6% (over its previous level in 2009). With this information, we can say that: Question 2 options: either output or prices increased in 2010. the GDP deflator increased during 2010. both the GDP deflator and real GDP increased during 2010. only prices increased in 2010. real GDP increased during 20010.

Country A is a developing country. The nominal GDP in Country A (expressed in terms of...

Country A is a developing country. The nominal GDP in Country A (expressed in terms of Country A currency) was 100 in 2018 and 200 in 2019. Does this means that the production in Country A doubles in 2019? Give 2 reasons and explain why or why not..

Suppose country A has a GDP of $10 billion and country B has a GDP of...

Suppose country A has a GDP of $10 billion and country B has a GDP of $2 billion. If we assume that there are only two countries A and B in the world and that the coefficient of B can be approximated by the inverse of the world GDP, approximately what volume of trade is predicted to occur between the two countries if they are both 500 miles apart and our uncertainty parameter is given by 1.5. Suppose instead that...

Nominal GDP was $21,329.8 billion in Q2 of 2019 and fell to $19,520.1 billion in Q2...

Nominal GDP was $21,329.8 billion in Q2 of 2019 and fell to $19,520.1 billion in Q2 in 2020. Real GDP was $19,020.6 for Q2 in 2019 and $17,302.5 for Q2 in 2020, where 2012 was the base year. Compute the percentage change in the GDP deflator during this period.

) Suppose that this year’s money supply is $400 billion, nominal GDP is $1200 billion (or...

) Suppose that this year’s money supply is $400 billion, nominal GDP is $1200 billion (or $1.2 trillion), and real GDP is $1000 billion. a. What is the price level? What is the velocity of money? b. Suppose that the velocity is constant and the economy’s output of goods and services rises by 5%. If the Fed keeps the money supply constant, what will happen to the price level? c. Suppose again that velocity is constant and the economy’s output...

Select a country with a high GDP (real or nominal) and a country with a low...

Select a country with a high GDP (real or nominal) and a country with a low GDP ( again with real.or nominal). Contrast what the level of GDP in the countries means for consumers and producers. Based on your findings, is GDP a good measure of economic well-being? Please include a reference. thank you.

7. ECON1A a) The money supply in Freedonia is $W billion. Nominal GDP is $X billion...

7. ECON1A a) The money supply in Freedonia is $W billion. Nominal GDP is $X billion and real GDP is $Y billion. What are the price level and velocity in Freedonia? b) If the price level changes, what happens to aggregate demand? c)What is the effect of a government budget deficit on national savings? d) In a pure free market, if people spend more of their income for consumption, what is the effect on GDP and its components?

Suppose that this year’s velocity is 10, nominal GDP (PY) is $50 billion, and real GDP...

Suppose that this year’s velocity is 10, nominal GDP (PY) is $50 billion, and real GDP (Y) is $10billion (a) What is the price level and money supply? Please show all calculations for full credit (b) Suppose that velocity constant and the economy’s output of goods and services (Y) decreased by 5 percent. What will be the new price and new nominal GDP if the Fed increases the money supply by 5%? (c) Suppose that velocity constant and the economy’s output...

Question