Question

2) Using the data below, calculate for each year: the GDP deflator, the inflation rate, and real economic growth:

Nominal GDP: 2016= 4,540,332
2017= 5,987,201
2018= 7,231,600

Real GDP: 2016= 3,723,072
2017= 4,670,017
2018= 6,436,124

Answer 1

2016:

Nomimal GDP = 4540332 and Real GDP = 3723072

GDP Deflator = [Nominal GDP / Real GDP] x 100 = [4540332 / 3723072] x 100 = 121.95

2017:

Nomimal GDP = 5987201 and Real GDP = 4670017

GDP Deflator = [Nominal GDP / Real GDP] x 100 = [5987201 / 4670017] x 100 = 128.205

2018:

Nomimal GDP = 7231600 and Real GDP = 6436124

GDP Deflator = [Nominal GDP / Real GDP] x 100 = [7231600 / 6436124] x 100 = 112.36

Inflation Rate between 2016 and 2017 = [GDP Deflator 2017 - GDP Delfator 2016 / GDP Deflator 2016] x 100 = [128.205 - 121.95 / 121.95] x 100 ~ 5.13 %

Inflation Rate between 2017 and 2018 =  [GDP Deflator 2018 - GDP Delfator 2017 / GDP Deflator 2017] x 100 = [112.36 - 128.205 / 128.205] x 100 ~ - 12.36 %