1. Find the growth rate of nominal GDP for 2019. Find the growth rate of real GDP for 2019. Why are they different? In which year is the share of nominal consumption over Nominal GDP the largest? (Show how you reach this conclusion) In which year is the share of real consumption over Real GDP the largest? (Show how you reach this conclusion) Compute the inflation rate using the GDP Deflator (2016 is the base year) for 2018.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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1.

  • Find the growth rate of nominal GDP for 2019.
  • Find the growth rate of real GDP for 2019. Why are they different?
  • In which year is the share of nominal consumption over Nominal GDP the largest? (Show how you reach this conclusion)
  • In which year is the share of real consumption over Real GDP the largest? (Show how you reach this conclusion)
  • Compute the inflation rate using the GDP Deflator (2016 is the base year) for 2018.
Year
2016
2017
2018
2019
2020
Quantity of
Darhash Tea
2'500
2'200
2'100
1'800
1'500
Price of
Darhash Tea
10
14
15
15
16
Quantity of
Price of
Youshemi Tea Youshemi Tea
1'000
900
1'000
700
500
15
15
20
25
30
Quantity of
Avocado
Toasts
3'000
3'000
3'000
3'000
2'500
Price of
Avocado
Toasts
1
2
2
2
1
Quantity of Price of
UFOS
UFOS
10
8
6
LO
5
5
1'000
1'200
1'400
1'300
1'300
Transcribed Image Text:Year 2016 2017 2018 2019 2020 Quantity of Darhash Tea 2'500 2'200 2'100 1'800 1'500 Price of Darhash Tea 10 14 15 15 16 Quantity of Price of Youshemi Tea Youshemi Tea 1'000 900 1'000 700 500 15 15 20 25 30 Quantity of Avocado Toasts 3'000 3'000 3'000 3'000 2'500 Price of Avocado Toasts 1 2 2 2 1 Quantity of Price of UFOS UFOS 10 8 6 LO 5 5 1'000 1'200 1'400 1'300 1'300
Year
2016
2017
2018
2019
2020
Nominal GDP
53000
59900
65900
57000
48000
Real GDP
53000
46500
45000
36500
30000
GDP Deflator
100.00
128.82
146.44
156.16
160.00
Transcribed Image Text:Year 2016 2017 2018 2019 2020 Nominal GDP 53000 59900 65900 57000 48000 Real GDP 53000 46500 45000 36500 30000 GDP Deflator 100.00 128.82 146.44 156.16 160.00
Expert Solution
Step 1

Nominal GDP is Gross Domestic Product (GDP) less the effect of inflation. A country's real GDP is its GDP adjusted for inflation. A country's nominal GDP is represented in current year prices for goods and services, whereas real GDP is measured over a base year.

In order to calculate inflation, the GDP deflator, also known as the implicit price deflator, is utilized. It is used to determine a country's annual pricing levels for newly generated domestically manufactured final goods and services.

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