Question

5)    Data for Zenland are shown below. Calculate real GDP for each quarter and also the real GDP growth rate between quarters. In what time periods is unemployment is likely to rise? Describe and draw a graph of real GDP over time.

Quarter	Nominal GDP	GDP Deflator
1999 Q1	$325 million	102.2
1999 Q2	332 million	105
1999 Q3	343 million	108.6
1999 Q4	365 million	109.5
2000 Q1	384 million	110.7
2000 Q2	389 million	112.8

Answer 1

Quarter	Nominal GDP ($ Million)	GDP Deflator	Real GDP ($ Million)	Real GDP growth rate (%)
1999 Q1	325	102.2	318.00
1999 Q2	332	105	316.19	-0.57
1999 Q3	343	108.6	315.84	-0.11
1999 Q4	365	109.5	333.33	5.54
2000 Q1	384	110.7	346.88	4.07
2000 Q2	389	112.8	344.86	-0.58

Unemployment rate will increase when the real GDP will decrease in any particular quarter. On this basis, in 1999-Q2, 1999-Q3 and 2000-Q2, the unemployment rate will increase as the real GDP growth rate is negative in these quarters.