Question

3. (5 pts) In 1990, the CPI-U was 130.7. In 2000, the CPI-U was 172.2 In 2010, the CPI-U was 218.056 a. What is the percentage change in the price level from 1990 to 2000? b. What is the percentage change in the price level from 2000 to 2010? c. Was inflation higher during the 1990s to the 2000s? 4. (5 pts) (1) Nominal GDP in 1998 was $9.062.817 Trillion and the GDP deflator in 1998 was 71.84296. (2) Nominal GDP in 2008 was $14.712845 Trillion and the GDP deflator in 2008 was 89.97610. (3) Nominal GDP in 2018 was $20.494079 Trillion and the GDP deflator in 2018 was 105.34427 a. What was the percentage change in real GDP from 1998 to 2008? b. What was the percentage change in real GDP from 2008 to 2018?

Answer 1

3)

% change in price level from 1990 to 2000 = (CPI₂₀₀₀ - CPI₁₉₉₀)*100 / (CPI₁₉₉₀) = (172.2 - 130.7)*100 / (130.7) = 31.75%

% change in price level from 2000 to 2010 = (CPI₂₀₁₀ - CPI2000)*100 / (CPI₂₀₀₀) = (218.056 - 172.2)*100 / (172.2) = 26.63%

Yes, the inflation was higher during 1990 to 2000 as compared to that during 2000 to 2010,

as (% change in price level from 1990 to 2000) > (% change in price level from 2000 to 2010)

4)

Real GPD = (Noninal GDP)*100 / (GPD deflator)

Real GDP₁₉₉₈ = (9.062817)*100 / (71.84296) = $12.6147 trillion

Real GDP₂₀₀₈ = (14.712845)*100 / (89.97610) = $16.35194 trillion

Real GDP₂₀₁₈ = (20.494079)*100 / (105.34427) = $19.45438 trillion

% change in real GPD from 1998 to 2008 = (Real GPD₂₀₀₈ - Real GDP₁₉₉₈)*100 / (Real GDP₁₉₉₈)

= (16.35194 - 12.6147)*100 / (12.6147) = 29.63%

% change in real GPD from 2008 to 2018 = (Real GPD₂₀₁₈ - Real GDP₂₀₀₈)*100 / (Real GDP₂₀₀₈)

= (19.45438 - 16.35194)*100 / (16.35194) = 18.97%