Download Practicing Calculations with GDP (Deflator, etc)

Practicing Calculations with GDP
1. Using the following figures (which represent one economy for one year), calculate GDP
using the expenditure approach. (Show your work!)
1. Consumer expenditures = $600 billion
2. Business spending on capital goods = $150 billion
3. Government expenditures = $200 billion
4. Imports = $75 billion
5. Exports = $65 billion
6. Transfer payments (foreign aid, membership dues to IMF/UN/etc.) = $50 billion
7. Depreciation of capital goods = $25 billion
8. Income earned abroad and sent back to this country = $15 billion
9. Income earned in this country and sent to other countries = $10 billion
2. Does the above number represent nominal or real GDP? Why?
3. Calculate GNP/GNI using the same numbers from above. Show your work.
4. Using the chart below, calculate the nominal GDP for 2015 in this economy.
5. Using the chart below, calculate the nominal GDP for 2016 in this economy.
6. If 2015 is the base year, what is the real GDP for 2015 in this economy? Why?
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2015 Quantity
90
40
2015 Price
$10/unit
$1/unit
2016 Quantity
90
40
2016 Price
$15/unit
$2/unit
7. Write the equation for calculating real GDP.
8. Calculate the real GDP for this economy in 2016. The base year is 2015.
(***Remember: Real GDP is a measure of output valued at constant (unchanging)
prices!***)
9. Write the equation for GDP deflator:
10. Calculate the GDP deflator for this economy in 2015 and 2016.
11. Calculate real GDP for 2017 if in that year the nominal GDP becomes 1000 and the
price deflator is 200.
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12. What is the base year on the table below?
Why do you know this?
13. Complete the table below, which shows actual data for the US economy.
Year
1960
Nominal GDP (billions)
$513.4
GDP Deflator (Price Index)
26.0
1970
1010.7
35.1
1980
2708.0
71.7
1987
4539.9
100.0
1991
5724.8
117.0
1994
6736.9
126.1
Real GDP (bil.)
Has this economy experienced inflation?
How do you know?
Has this economy experienced real growth?
How do you know?
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More practice!!! Below are figures for a simplified economy. Calculate the price deflator,
nominal or current “GDP”, and real or constant “GDP”, using Year 2 as the base year.
Year Quantity of Goods Price Per Good
Price Deflator
Nominal GDP Real GDP
1
3
$2
2
5
4
3
6
5
4
8
6
5
9
8
Has this economy experienced inflation?
How do you know?
Has this economy experienced real growth?
How do you know?
Would it make a difference in the calculations to use year 4 as a base year? Explain.
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