(1) Economic data for republic of Econstein is presented below. Use the data to

Question

(1) Economic data for republic of Econstein is presented below. Use the data to answer question a-f Year Nominal GDP CPI (in millions) (base year 2002) 2011 4100 105.2 2012 4500 104.7 a) Determine the inflation/deflation rate between 2011 and 2012? b) Calculate real GDP in 2011 measured in 2002 prices? c) Calculate real GDP in 2012 measured in 2002 prices? d) Calculate the growth rate of nominal GDP between 2011 and 2012? e) Determine the growth rate of real GDP between 2011 and 2012? f) Was the growth rate of nominal GDP equals the growth rate of real GDP? Explain in details

Explanation / Answer

a)inflation =[ {CPI(2008)/CPI(2007)}-1]X100=-0.475%, therefore the deflation rete is 0.475% b)GDP, or Gross Domestic Product is the value of all the goods and services produced in a country. The Nominal Gross Domestic Product measures the value of all the goods and services produced expressed in current prices. On the other hand, Real Gross Domestic Product measures the value of all the goods and services produced expressed in the prices of some base year. here the base year is 2002 suppose therefore the inflation for the years 2011 and 2002 is [(104.7/100)-1]X100=5.2%, therefore the real GDP =4100/(1+0.052)=3897.34 rest comming soon...

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