Question

7a. From 2017 to 2050, Peru may see its nominal GDP increase from $204 Billion to $530 Billion. In 2017 its CPI was 100 and in 2050 its CPI is 145. What is the total change in real GDP over this period in dollars? 7b. A Stern students wage is $30 per hour in 2017. Presume that by 2027, the CPI has gone from a base of 1 00 to 117. If I told you the student got a 75% real wage increase, what is the student's new nominal salary?

Answer 1

Q7a
answer
real value =(nominal value of a year /CPI of the year)* 100
real GDP in 2050=(530/145)*100
=365.517241
the real GDP is $365.52
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Q7b
the new real wage =30*1.75
=52.5

Nominal wage =(real wage /100)*CPIof the year
=(52.5/100)*117
=61.425
the nominal wage is $61.425