In: Economics
The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data. Instructions: Enter your responses in the gray-shaded cells. Round your answers to 2 decimal places.
Year Nominal GDP, Billions Price Index (2005 = 100) Real GDP, Billions Effect on Nominal GDP
1968 $914.80 22.01 ### ###
1978 2298.80 40.40 ### ###
1988 5105.40 66.98 ### ###
1998 8798.50 85.51 ### ###
2008 14446.40 108.48 ### ###
(Please fill in the (blanks= ###) Thanks)
Year | Nominal GDP Billions $ | Price Index | Real GDP Billions $ | Effect on nominal GDP |
1968 | 914.80 | 22.01 | 4156.29 | Inflating |
1978 | 2298.80 | 40.4 | 5690.1 | Inflating |
1988 | 5105.40 | 66.98 | 7622.28 | Inflating |
1998 | 8798.50 | 85.51 | 10289.44 | Inflating |
2008 | 14446.40 | 108.48 | 13317.11 | Deflating |
Price index= Nominal GDP/Real GDP | ||||
1968 | ||||
Let real GDP be x | ||||
(914.80/x)=22.01 | ||||
22.01 x=914.80 | ||||
x=$41.5629. x 100=$4156.29 | ||||
1978 | ||||
Let real GDP be x | ||||
(2298.80/x)=40.4 | ||||
40.4 x=2298.80 | ||||
x=$56.9010x 100=$5690.10 | ||||
1988 | ||||
Let real GDP be x | ||||
(5105.40/x)=66.98 | ||||
66.98x=5105.40 | ||||
x=$76.2228 *100=$7622.28 | ||||
1998 | ||||
Let real GDP be x | ||||
(8798.50/x)=85.51 | ||||
85.51x=8798.50 | ||||
x=$102.8944 x100=$102,89.44 | ||||
2008 | ||||
Let real GDP be x | ||||
(14,446.40/x)=108.48 | ||||
108.48x=14446.40 | ||||
x=$133.1711 x100=$13317.11 | ||||