2. Use the table below to answer questions Index 80 100 110 140 155 2 (base year

Question

2. Use the table below to answer questions Index 80 100 110 140 155 2 (base year) a. What is the inflation rate between year 2 and year 3? Iafation rate in a th year (CPI in s th year-CPI in n-1 th year)/ CPI in n Inflation in 3rd year-(110-100)100-10% 1 year b. What is the inflation rate between year 4 and year 5? Inflation in the 5 th year (155-140/140 0.107142857 *100% c. What is real value of a dollar in Year 4? The real value of the dollar in n th year (1/140) 100 0.10714285714 * 100% (/CPI in n th year) base year CPI d. If the nominal GDP is $9,000 billion in year 3, what is the real GDP?

Explanation / Answer

d.

Real GDP is the Nominal GDP adjusted for inflation.

Nominal GDP in year 3 = $9,000 billions

Consumer price index in year 3 =110

Real GDP in year 3 = ( Nominal GDP / Price index ) *100

=($9,000/110)*100

=$8,181.81

Hence the real GDP in year 3 will be $8,181.81

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.