Question

In: Economics

Using the table below, make some calculations and answer the questions: Year Nominal GDP Billions Real...

Using the table below, make some calculations and answer the questions:

Year Nominal GDP Billions Real GDP Billions

2013 16,691.5 15,612.2

2014 17,393.1 15,982.3

2015 18,036.6 16,397.2

2016 18,569.1 16,662.1

2016 18,569.1 16,662.1

Compute the rate of growth of the economy...

a) Between 2013 and 2014 (2 POINTS)

b) Between 2014 and 2015 (2 POINTS)

c) Between 2015 and 2016 (2 POINTS)

d) Comment briefly on your previous results (use three lines). (2 POINTS)

e) Which one is more important: Nominal GDP or Real GDP? Why? EXPLAIN briefly. (2 POINTS)

Solutions

Expert Solution

D) Hence as per the growth rate evaluation shown above , it can be depicted that Rate of growth rate have slightly flared up in 2015 from 2014 but after the year 2015 to 2016 ,it has eventually dwelled.

E) Nominal GDP measures the value of economy’s total output at the prices prevailing in the period during which output is produced.

On the other hand, real GDP measures the total output produced in any one period at the prices of some base year. This is done to find an estimate of the real change in output during the specified years.While we look at the growth rate of the economy, it is the real GDP which will give us an apt picture of the economy’s growth because it adjusts for any price changes that takes place and calculate outputs at the same base year prices.

A growth in nominal GDP cannot be called as growth in the economy completely because that increase could be due to the increase in prices that happened during that period.

However it is the increase in real GDP that shows the actual growth and can be attributed to factors like increase in productivity, fall in unemployment rate, improvement in technology, efficient use of resources and so on during the time period in consideration.Hence Reald GDP is a better approach


Related Solutions

Complete the table. Round your calculations for nominal GDP, real GDP, and GDP deflator values to...
Complete the table. Round your calculations for nominal GDP, real GDP, and GDP deflator values to two decimals and rate calculations to three decimals. Year Nominal GDP Real GDP GDP Deflator Inflation Rate 1 1760.00 90.01 2 2000.00 0.111 3 2300.00 105.60 4 2410.00 2222.22 5 2327.44 112.57
Consider the following table: Year Quantity of Money (billions of $) Velocity Real GDP (billions of...
Consider the following table: Year Quantity of Money (billions of $) Velocity Real GDP (billions of 2009 $) GDP Deflator 2006 $1,369 10.274 $14,717 2009 $1,684 8.650 1.002 2012 $2,434 6.696 $15,384 Fill in the missing data, using the quantity equation of money. Why might velocity change in this way? Calculate the average inflation rate between 2006 and 2009 and between 2009 and 2012. If velocity had remained at the 2006 level, what would the deflator have been in 2009...
Answer the following macroeconomics questions. a) What is the difference between nominal GDP and real GDP?...
Answer the following macroeconomics questions. a) What is the difference between nominal GDP and real GDP? Which one of them is used to calculate the economic growth rate? Justify your answer. b) Give the equation used to calculate the unemployment rate. State the different types of unemployment. In your opinion, which type is the most problematic one? Justify your answer. c) Governments may achieve certain economic goals; say controlling inflation, by implementing fiscal and/or monetary policies. Explain briefly the difference...
Consider the following data on Canadian GDP” Year Nominal GDP (billions) GDP Deflator (base year: 2002)...
Consider the following data on Canadian GDP” Year Nominal GDP (billions) GDP Deflator (base year: 2002) 2009 $1600 118 2008 $1520 121 What was the growth rate of nominal GDP between 2008 and 2009? (The growth rate is the percentage change from one period to the next). What was the growth rate of the GDP deflator between 2008 and 2009? What was real GDP in 2008 measured in 2002 prices? What was real GDP in 2009 measured in 2002 prices?...
Consider the following data on U.S. GDP: Year Nominal GDP GDP Deflator (Billions of dollars) (Base...
Consider the following data on U.S. GDP: Year Nominal GDP GDP Deflator (Billions of dollars) (Base year 2009) 2017 19,485 107.95 1997 8,578 74.45 The growth rate of nominal GDP between 1997 and 2017 was _______, and the growth rate of the GDP deflator between 1997 and 2017 was ______. (Hint: The growth rate of a variable XX over an NN-year period is calculated as 100×((XfinalXinitial)(1N)−1)100×XfinalXinitial1N−1) Measured in 2009 prices, real GDP was ______billion in 1997 and ______billion in 2017....
In the following Table you are given information on Real GDP and Nominal GDP. Compute the...
In the following Table you are given information on Real GDP and Nominal GDP. Compute the percentage change in Nominal GDP from 1970 to 1980 (15 points) and the percentage change in Real GDP (15 points) from 1970 to 1980. Year Nominal GDP (In Current Prices) Real GDP (Base Year 2000 Prices) 1970 4,000 2,000 1980 6,000 4,500 Where do you attribute the difference between the two percentage changes?
Consider the following data, answer the question below: Year Nominal GDP GDP Deflator (Base year =...
Consider the following data, answer the question below: Year Nominal GDP GDP Deflator (Base year = 2010) 2012 646 104 2013 662 107 Calculate Real GDP in 2012 2) Given the data below calculate Nominal GDP, Real GDP, and the GDP Deflator using 2010 as the base year. Year Price of Ford Mustang Quantity of Mustangs Sold Price of Mountain Bike Quantity of Mountain Bikes sold 2010 $31,000 6000 $325 200 2011 $33,000 6300 $350 225 2012 $30,000 5500 $365...
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions 494...
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions 494 118 515 502 109 512 510 100 510 518 90 507 526 82 500 Suppose that aggregate demand increases such that the amount of real output demanded rises by $21 billion at each price level. Instructions: Enter your answers as whole numbers. a. By what percentage will the price level increase?  percent.      Will this inflation be demand-pull inflation or will it be cost-push inflation?...
Use the following table to answer the questions below. Country GDP in 2012 GDP in 2013...
Use the following table to answer the questions below. Country GDP in 2012 GDP in 2013 Population in 2013 United States 16,244,575 16,724,272 316,438,601 Mexico 1,177,398 1,327,021 118,818,228 United Kingdom 2,476,665 2,489,674 63,395,574 Kenya 40,697 45,311 44,037,656 Note that GDP numbers are presented in millions (add six zeros on to each of the reported numbers). 1. Calculate the GDP growth rate for each country between 2012 and 2013. Round to one decimal place. US: Mexico: UK: Kenya: 2. Calculate GDP...
what are some of criticisms of real and nominal GDP as measures of output?
what are some of criticisms of real and nominal GDP as measures of output?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT