27. The following data show nominal GDP and the appropriate price index for several years. Compute real GDP for each year and indicate whether you have “inflated” or “deflated” nominal GDP in finding real GDP. All GDP are in billions.
Nominal Price level Inflated (I)
Year GDP index Real GDP Deflated (D)
1 $117 120 ___ ___
2 124 104 ___ ___
3 143 85 ___ ___
4 149 96 ___ ___
5 178 112 ___ ___
6 220 143 ___ ___
To quote one of our very good math and science tutors: “You will find here at Jiskha that long series of questions, posted with no evidence of effort or thought by the person posting, will not be answered. We will gladly respond to your future questions in which your thoughts are included.”
answer
put the chrome to the dome
To compute the real GDP for each year, we need to use the formula:
Real GDP = Nominal GDP / Price index
For Year 1:
Real GDP = $117 billion / 120 = $0.975 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
For Year 2:
Real GDP = $124 billion / 104 = $1.192 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
For Year 3:
Real GDP = $143 billion / 85 = $1.682 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
For Year 4:
Real GDP = $149 billion / 96 = $1.552 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
For Year 5:
Real GDP = $178 billion / 112 = $1.589 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
For Year 6:
Real GDP = $220 billion / 143 = $1.538 billion (in billions)
We have deflated the nominal GDP to find the real GDP.
In the table, fill in the values for real GDP:
Year | Nominal GDP | Price level | Real GDP | Deflated (D) or Inflated (I)
1 $117 120 $0.975 D
2 $124 104 $1.192 D
3 $143 85 $1.682 D
4 $149 96 $1.552 D
5 $178 112 $1.589 D
6 $220 143 $1.538 D
Note: "D" represents deflated nominal GDP in finding real GDP.