Question

1-a.What’s the difference between nominal and real GDP? Which one is a better macroeconomic indicator? Why or why not?

1-b. What’s the annual nominal and real GDP growth rate of the US in the last 5 years? What’s conclusion can you make from those data (.i.e. Do you think the US economy is improving or slowing down?)

1-c. Define GDP per capita. Compare and contrast the GDP per capita in the US in the past 5 years compared to China? Explain your findings.   

DQ # 2

2- What’s the difference between Consumer Price Index (CPI) and GDP deflator ? Which one is a more accurate measure of the inflation rate? Why?

Answer 1

1a)Nominal GDP is GDP without the effects of  inflation or deflation  while real GDP uses a GDP deflator in order to adjust for inflation  and so shows changes in real output. A country's nominal GDP is higher than real GDP because nominal GDP reflects inflation which is a positive number.

Real GDP is the measure of economic output by accounting for the effects of inflation or deflation and so it gives a better measure of growth than nominal GDP.Without real  GDP it will appear that the country's production has gone up when in reality only the prices have gone up .So real GDP is abetter economivc indicator.

1b)Nominal GDP of US in last 5 years was ,in 2018 it was 20, 494.10billions , in 2017 it was 19, 485 .40 billions,in 2016 it was 18, 707.80 billions,in 2015 it was 18,219 .30 billions and in 2014 it was 17, 521.70 billions.United states nominal GDP growth was 2.067% in 2020 March as compared to 3.978% in 2019 Dec.

The US economy shrank in 2020 it was 2.0% .Real GDP growth rate in2019 was2.3 %, 2018 was 2.86% , in 2017 it was 2.22 %, in 2016 it was 1.57 %, in 2015 it was 2.88 %.

The annual rate of growth in GDPie the value of goods and services in the economy has been strong in recent years. But growth rate has slowed in 2019 and shrank further in 2020 as the statistics above show..

1c)Per capita GDP measures the average income earned per person. It is obtained by dividing National income by the total population.This gives a good measurement of a country's standard of living.

US GDP per capita for 2019 was$65,111.6 while GDP per capita  for China was 9770 USD. US GDP per capita for 2018 was  $62,887 while for China it was7755US dollars.US GDP per capita for 2017 was $59, 958 while for Chian it was 7308.1 US dollars .US GDP per capita for 2016 was $57, 928 while for China it was 6883.9US dollars.US GDP per capita for 2015 was $56, 823 while for China it was 6484.4 US dollars.

US GDP per capita was seen to be higher than GDP per capita of China in the last 5 years.