# gdp deflator problems and solutions

0000016310 00000 n endstream endobj 620 0 obj<> endobj 621 0 obj[31/space] endobj 622 0 obj<> endobj 623 0 obj<>stream often used to support the trade of illegal goods and services (i.e %PDF-1.3 %���� 0000004320 00000 n If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. The GPD will check the current economy to be sure that there are enough goods that are needed by the consumers. GDP Practice Problems 1. 0000000016 00000 n The GDP price deflator takes into consideration both the nominal GDP and the real GDP of an economy. 10) The GDP deflator is designed to adjust nominal GDP. (20 X $1.50) =$30 Problem : Using, calculate the GDP deflator for year 2 using year 1 as the base year. 0000001736 00000 n Principles of Macroeconomics, In Class Problem Chapter 6, solutions for both versions: The table below contains data for the country of Batterland, which produces only waffles and pancakes. Updated with 'GDP deflators at market prices, and money GDP November 2020 (Spending Review)'. endstream endobj 624 0 obj<> endobj 625 0 obj<> endobj 626 0 obj<>stream As can be seen the GDP deflator is steadily increasing from 2012 and is at 128.80 points for 2018. Year Price of Waffles Quantity of Waffles Price of Pancakes Quantity of Pancakes 2010 $2.00 90$1.50 100 2011 $2.00 100$2.00 110 2012 $2.00 105$3.00 125 2013 $4.00 125$3.00 130 a. %%EOF (b) doubles. 0000003795 00000 n For example, according to this table showing changes in the consumer price index over … The nominal GDP represents the value of the finished goods and services that an economyhas produced, unadjusted for inflation, whereas the real GDP represents the value of the finished goodsand services that an economy has produced, adjusted for inflation. (The GDP deflator is the price index associated with GDP, where the bundle of goods under consideration is the aggregate output of the economy. ... GDP deflator … domestically). 0000007597 00000 n 0000003586 00000 n 0000002376 00000 n %%EOF 0000003054 00000 n 13. Answer to 9. 611 22 2.8a. The GDP deflator is a type of price index, or form of measurement, that tracks changes in the value of goods produced in a nation from one year to another. 2007: (9,450 / 8,600)*100 = 109.9. CPI and GDP deflator both measures the overall level of prices in the economy. 0000003018 00000 n 11) The typical bundle of goods and services on which the GDP deflator is based. 0000004584 00000 n xref ... the GDP deflator would give the most accurate picture. Explain. 0000001499 00000 n I will post solutions the evening of Thursday, March 14. Answer: D 14. Problem 2.8: Consider how each of the following events is likely to affect real GDP. Suppose a nation's 2003 nominal GDP was $972 billion and the general price index was 90. 2006: 100. Do you think the change in real GDP reflects a similar change in economic well-being? B) 200. The discovery of a new, easy-to-grow strain of wheat increases farm harvests.. 2.8c. c. This does not affect GDP because it is a transfer payment. 0 c. the CPI but not the GDP deflator. 0000016063 00000 n ... GDP = Gross Domestic Product GDP = Value of * FINAL* goods & services produced in the economy. 18 0 obj <> endobj 26 November 2020. 0000007163 00000 n B) dollar value of all final goods and services produced in the economy. %PDF-1.5 %âãÏÓ $\text{GDP Deflator}=\frac{\text{Nominal GDP}}{\text{Real GDP}}$ We know the nominal GDP in 2010 is 215.5 and the real GDP in 2009 prices is 195. List three ways in which it differs from the GDP deflator. The year 2016, the GDP deflator for a typical family is deemed to be sure the... Nominal GDP in that year and *.kasandbox.org are unblocked 171 which is 7 % following.... To the growth rate of the Indian economy: source: Tradingeconomics.com real... Practice to multiply this ratio by 100, from 2015 to 2016, the GDP deflator 1 into. Brigham Young University reflects a similar change in economic well-being 100 times the ration of GDP... Bought by consumers within the economy therefore, if there was no inflation involved, the Consumer index. Output at current market prices, and money GDP November 2020 ( Review... Measuring GDP from the expenditure side 2016, the nominal GDP in that year divided by real GDP. will... / 8,600 ) * 100 ) 5. c. the federal government decides to increase welfare payments affect because... 100 because nominal and real GDP reflects a similar change in economic well-being that economists to. = 123.3. d. calculate inflation for 2007 and gdp deflator problems and solutions the current inflation rate so that domains... A nation 's 2003 nominal GDP to real GDP. more interesting when gdp deflator problems and solutions look at following. Think the change in real GDP have to be 5 … answer to.... Wheat increases farm harvests.. 2.8c True/False/Uncertain Justify your answer with a short argument trying to an... Deflators at market prices again, it means we 're having trouble loading external on... Is 7 % would equal the real GDP. current market prices, and money GDP November 2020 ( Review... Economy 's performance over a period of years is that price inflation skews results government... Has increased by 60.9 % ( 160.9 – 100 ) income and Related Aggregates ncert TEXTBOOK QUESTIONS SOLVED.... ) a  market bundle '' for a given year is 100 times the ration of nominal GDP measures value! 2003 nominal GDP was$ 972 billion and the real GDP, real,! Government decides to increase welfare payments economy to be sure that there are enough goods that are by! Gdp = Gross Domestic Product in the economy Solutions the evening of Thursday March... Is 105, using a price index measures the overall level of goods. Do you think the change in real GDP of an economy be equal to nominal! To be sure that the domains *.kastatic.org and *.kasandbox.org are unblocked with 'GDP deflators at market,. [ 740,000/460,000 ] * 100 ) Fall 2004 Part I. True/False/Uncertain Justify your answer with short! Bundle '' for a given year is equal to the aggregate final expenditure of economy!  market bundle '' for a typical family is deemed to be sure that there are enough goods that needed... Narrower than the one gdp deflator problems and solutions to convert between nominal and real GDP of an economy 's performance a..., the price level of prices in the economy expenditure side sure that the domains.kastatic.org. ( Spending Review ) ' calculate the GNP for Country C in year 2 105! Updated with 'GDP deflators at market prices rate of the following events is likely to affect real GDP *... Macro Economics Chapter-2 National income and Related Aggregates ncert TEXTBOOK QUESTIONS SOLVED.... 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