ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Why do economists prefer to use real
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Introduction
GDP, often known as the national income of the economy in this context, measures the production of all commodities and services in the economy during a specific time period. It serves as a gauge for the economy's rate of expansion. It serves as a benchmark for worldwide comparisons of national performance. It excludes goods produced outside of the nation's borders and only includes those that can be produced within the economy.
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- You are going to compare and contrast the GDP of the United States to that of another country of your choice for the last 3 years. Your report in narrative format should address the following questions: Describe the current GDP growth rate of the two countries. Which component of the GDP of the two countries changed the most for the last 3 years? Identify the possible causes of the changes. Describe the biggest component of the GDP of the two countries. What recommendations would you make in order to boost the GDP of the two countries?arrow_forwardWhy do economists prefer to use real gross domestic product (RGDP) instead of nominal gross domestic product (NGDP) when measuring the economic growth of a country? Why is real GDP considered more relevant than the other?arrow_forwardAn economy produces three products, bags, computers and shirts. The prices and quantities of these products in 2020 and 2021 are shown in the table below: 2020 2021 Price Price Quantity Quantity 300 $10 $12 330 Bags Computers $600 100 $650 110 Shirts $18 2,000 $20 2,200 2020 2021 Measure the nominal and real GDP for 2019 and 2020, using 2020 as the base year. Measure the nominal and real GDP growth rate in 2021. Which value is more accurate in measuring the growth rate of the economy? Explain. (b) The information on price and quantity of three products consumed by a typical household in the year 2020 and 2021 is given by the table below 2020 2021 Price Quantity Price 10 Quantity $5 $5.50 12 Fish Beef $10 5 $11 4 Train Ride $8 20 $9 22 Using 2020 as the base year, measure the CPI for 2021 and the inflation rate in 2021. Does this inflation rate correctly measure the cost of living changes for households in 2021? Explain.arrow_forward
- Suppose that real GDP was $2265 billion in 2018 and $2285 billion in 2019. Calculate the growth rate for this economy. Provide answer to 2 decimal points.arrow_forwardGDP is often used as a measure of well-being. Is it a reasonable measure of well-being? If so, why does Norway with its high standard of living have a relatively low GDP? Why do India and China, with their relatively low standards of living have some of the highest GDP in the world?arrow_forwardSuppose nominal GDP in 2018 was $180,000,000 and in 2019 it was $185,000,000. The GDP price index in 2018 was 150 and in 2019 it was 153. The population in 2018 was 2,580 and in 2019 it was 2,600. Calculate Real GDP and Real GDP per capita in each year. Calculate the growth rates of Nominal GDP, Real GDP, and Real GDP per capita. Describe why the growth rates so different?arrow_forward
- How is it calculated and what is the importance of the growth rate of GDP or GNP of Puerto Rico or of any country? Explain.arrow_forwardProvide a table with the nominal GDP for Trinidad and Tobago for 2020 and 2021. Using only the nominal GDP, what do you know about (i) Changes in the level of output during this period? Explain (ii) Changes in prices during this period? Explain. (iii) Would your answer change if you were using Real GDP? Explain.arrow_forwardUse the following information to calculate the growth rate. Round to two decimal places. Nominal GDP Year 1: 7.5 trillion Real GDP Year 1: 9.2 trillion Nominal GDP Year 2: 7.9 trillion Real GDP Year 2: 9.4 trillionarrow_forward
- The table attached gives data on the production and prices in a small economy. Use 2012 as the base period. What does nominal GDP equal in 2012? What does nominal GDP equal in 2013? What does real GDP equal in 2013? Calculate the growth rate in real GDP from 2012-2013arrow_forwardIn 2018, India was the world’s seventh largest economy, with a $2.69 trillion GDP (as measured in U.S. dollars). India was also one of the world’s fastest-growing economies, with an annual growth rate of real GDP of 7.3%. a. If the country maintains the same growth rate, how many years will it take for India’s GDP to double? b. Bangladesh’s GDP was $286.27 billion, but its growth rate was equal to India’s. How many years will it take for Bangladesh’s economy to double? c. Although Bangladesh and India have the same annual growth rate, their economies are much different in size. How can you explain the size difference to someone who is unfamiliar with scaling large numbers? Which strategies would you use?arrow_forwardConsider the following data on the Pakistan economy: Nominal GDP GDP Deflator Year (in billions of rupees) (base year 2012) 2018 21,501 111.4 1998 9,163 76.3 What was real GDP in 2018 measured in 2012 prices? What was the growth rate of real GDP between 1998 and 2018 Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain.arrow_forward
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