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In: Economics

2009 2012 2013 Product Quantity Price Quantity Price Quantity Price MP3s 40 $250.00 45 $200.00 50...

2009 2012 2013

Product Quantity Price Quantity Price Quantity Price

MP3s 40 $250.00 45 $200.00 50 $150.00

Tacos 2,000 2.00 2,200 2.25 2,300 2.40

Coats 300 50.00 310 52.00 350 55.00

Consider the data above for a simple economy: Using 2009 as the base year, calculate nominal GDP, real GDP, and the GDP deflator for 2013, Growth rate. Show your work

Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must always be higher than real GDP. Do you agree or disagree? Why?

Solutions

Expert Solution

No, I do not agree nominal GDP must always be higher than real GDP. If inflation is positive , then only nominal GDP will be higher than real GDP and if inflation is negative, real GDP will be higher than nominal GDP.

Rahul Sunny answered 2 years ago
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