Question

Use the table to answer the following questions. Year Gross Domestic Product units Total 2019 GDP...

Use the table to answer the following questions.

Year

Gross Domestic Product units

Total

2019

GDP in 2019 dollars

$21.43 trillion

2019

GDP in 1980 dollars

$6.91 trillion

2000

GDP in 2000 dollars

$10.28 trillion

2000

GDP in 1980 dollars

$4.92 trillion

1980

GDP in 1980 dollars

$2.86 trillion

What is real GDP for the year 1980?

a.

$21.43 trillion

b.

$6.91 trillion

c.

$4.92 - $2.86 trillion

d.

$2.86 trillion

How much did nominal GDP grow between the years 1980 and 2000?

a.

b.

c.

d.


Using the GDP deflator, what was the inflation rate between 1980 and 2000?

a.

b.

c.

d.

Homework Answers

Answer #1

(a) Real GDP for the year 1980 = $2.86 trillion. For the base year, nominal GDP as well as real GDP are same.

(b) Nonimal GDP in 1980 = $2.86 trillion and nominal GDP in 2000 = $10.28 trillion.

Hence, growth in nominal GDP from 1980 to 2000 = (10.28/2.86)-1 = 259.4%.

The annual growth rate = (10.28/2.68)^(1/20)-1=6.6% (upto 1 decimal point)

_______________________________

(c) [GDP deflator]2000 = [(nominal GDP * 100)/real GDP]2000 = (10.28 * 100) /4.92 = 208.9 (upto 1 decimal point).

On the other hand base year [GDP deflator]1980 = 100.

Hence, GDP deflator increases 208.9 - 100 = 108.9 or 108.9%.

On the other hand annual increase in GDP deflator = inflation = (208.9/100)^(1/20)-1 = 3.8%

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