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Measuring the Economy 1

Problems

Gross Domestic Product (GDP)

Consumer Price Index (CPI)

Problem :

Figure %: Goods and Services Produced in Country C
Calculate the nominal GDP for Country C in year 2.

([(15 X $1) + (12 X $2)] = $39

Problem : Using , calculate the real GDP for Country C in year 2, using year 1 as the base year.

(15 X $0.50) + (12 X $1) = $19.50

Problem :

Using , calculate the GNP for Country C in year 3 if candy is produced by foreigners.

(20 X $1.50) = $30

Problem : Using , calculate the GDP deflator for year 2 using year 1 as the base year.

GDP deflator = [(nominal GDP) / (real GDP)] – 1
Nominal GDP for year 2 = ($1 X 15) + ($2 X 12) = $39
Real GDP for year 2 = ($.50 X 15) + ($1 X 12) = $19.50

GDP deflator = (39 / 19.50) –1 = 1 = %100

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