Question

(A) Real gross domestic product (GDP) increased from $16.62 trillion to $18.05 trillion, and the price level increased from 120.0 to 123.4. Rounding to the nearest second decimal, how much was the growth rate of nominal GDP? (B) A US computer company buys computers from a US company for their workers. Which category of US gross domestic product (GDP) is this included? (C, I, G, NX or none of the four) (C) Refer to the following table, compute the CPI in 2013. Assume that 2012 is the base year. Good 2012 Price 2012 Quantity 2013 Price 2013 Quantity A $2.00 550 $3.50 600 $4.00 1,000 $5.50 900 с $2.00 250 $1.50 300 B (D) Refer to the following table, compute the GDP deflator in 2013. Assume that 2012 is the base year. Good 2012 Price 2012 Quantity 2013 Price 2013 Quantity $2.00 550 $3.50 B $4.00 1,000 $5.50 900 с $2.00 250 $1.50 300 A 600 (E) Assuming the price level decreased, and real gross domestic product (GDP) is greater than nominal GDP. Is the current year before or after the base year? (F) Official GDP may understate the actual output of an economy. Give one possible reason to explain this.

Answer 1

Q-1 :: ANSWER :: 11.68%

= > Explanation ::

Nominal GDP = Real Gdp * Price Level

So, $16.62 Trillion * 120 = 1994.4

$18.05 Trillion * 123.4 = 2227.37

=> Growth rate = ( 2227.37 - 1994.4 ) 100/ 1994.4

= 11.68%

Q-2 :: ANSWER :: Investment

=> Explanation ::

When an US Company Buy A Computer From US company Is Considered As investment Because new Equipment Purchased by The company so It is Investment

Q-3 :: ANSWER ::

=> Explanation ::

First Of All we have to calculate Market Basket Cost ::

2012 (BY) :: (550 * 2 ) + (1000 * 4 ) + (250 * 2)

= 1100 + 4000 + 500

= 5500

2013 :: (600 * 3.5) + (900 * 5.5)+ (300 * 1.5)

= 2100 + 4950 + 450

= 7500

So CPI = Current Year Market Baskte/Base Year Market Basket * 100

= 7500/5500 * 100

= 136

Q-4 :: ANSWER ::

GDP Deflator = Nominal GDP/Real GDP * 100

=> Nominal GDP 2013 :: (Current Year Prices)

   = (600 * 3.5) + (900 * 5.5)+ (300 * 1.5)

= 2100 + 4950 + 450

= 7500

=> Real GDP 2013 (base year Price)

= (600 * 2 ) + (900 * 4 ) + (300 * 2)

= 1200 + 3600 + 600

= 5400

So, GDP Deflator = Nominal GDP/Real GDP * 100

= 7500/5400 * 100

= 138.88