Question

1. Suppose that the General Motors plant in Oshawa in 2017 produced 9,500 vehicles, each of which sold at $21,052.63. Determine the Nominal Gross Domestic Product, GDP_N for 2017 given the values above.
   
2. And, suppose that the same General Motors plant in Oshawa in 2018 produces 10,000 vehicles each of which sold at $25,000.00. Determine the Nominal Gross Domestic Product, GDP_N for 2018 given the values above.
   
3. Determine the rate of Growth in Nominal Gross Domestic Product, GDP_N in the General Motors Plant between 2017 and 2018.
   
4. Suppose that we declare 2017 as the BASE YEAR for our “real” calculation. Determine the REAL Gross Domestic Product, GDP_R at the General Motors plant in Oshawa for 2018.
   
5. Determine the rate of Growth in REAL Gross Domestic Product, GDP_R in the General Motors Plant between 2017 and 2018.
   [NOTE: Because we’ve chosen 2017 as our BASE YEAR, that years NOMINAL and REAL values will be the same.]
   
6. Determine “how much of the Nominal change in GDP_N was the result of a change in Price, P. Use the GDP Deflator approach.
   

Answer 1

Nominal GDP 2017

= Price * Quantity

= 21052.63 * 9500

= $199,999,985

Nominal GDP 2018

= 25000 *10000

= $250,000,000

Growth rate GDP 2018

= ((250,000,000 - 199,999,985)/199,999,985)*100

= 25%

Real GDP

2017 = Same as Nominal GDP = $199,999,985

Real GDP 2018 = $21052.63*10000

= $210, 526, 300

Growth rate Real GDP

Similarly as above

= 5.26%

GDP Deflator 2018 =( Nominal GDP / Real GDP)*100

= 118.75%

Inflation Rate = ((GDP Deflator 2018 - GDP Deflator 2017)/ GDP Deflator 2017)*100

=((118.75 - 100)/100)*100

= 18.75%