Question

Fill in the missing data in the following table. Give answers to two decimals. Year Nominal...

Fill in the missing data in the following table. Give answers to two decimals.

Year Nominal GDP Real GDP GDP deflator
2012 $210,000   $ 100.0
2013 $ $215,000 110.0
2014 $260,000 $220,000   
2015 $290,000   $ 125.0
2016 $ $240,000 130.0
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Answer #1

Nominal GDP measures the the gross domestic product or output of the economy using current prices without adjusting for inflation. Real GDP measures the output using constant prices, taking into account for inflation. GDP deflator is measured by dividing nominal GDP by real GDP and multiplying it by 100. It measures the price inflation in the economy.

In 2012, the nominal GDP = 210,000, GDP deflator = 100,

So, 210,000/Real GDP * 100 = 100, so Real GDP = 210,000 * 100/100 = $ 210,000

In 2013, if real GDP = 215,000, GDP deflator = 110, Nominal GDP/215,000 * 100 = 110

Nominal GDP = 215,000 * 110/100 = $236,500

In 2014, Nominal GDP = 260,000, Real GDP = 220,000

GDP deflator = 260,000/220,000 * 100 = 118.18

In 2015: Nominal GDP = 290,000, GDP deflator = 125

= 290,000/Real GDP * 100 = 125

Real GDP = 290,000 * 100/125 = $232,000

In 2016: Real GDP = 240,000, GDP deflator = 130

Nominal GDP/240,000 * 100 = 130,

Nominal GDP = 130 * 240,000 / 100 = $312,000

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