Question

GDP Inflation Deflator Rate YEAR CPI GDP %GDP | Real GDP | %RGDP (%CPI) |(2015-100) 2012 231.2 95.43 1619 2013 234.72 97.11 16785 2014 236.27 98.94 17522 2015 237.83 100.00 18219 2016 242.7 01.09 1870 2017 247.91 103.02 19485 1. Calculate the annual inflation rate using the CPI. 2. Calculate the annual GDP growth rate using the GDP. 3. Explain how the inflation rate and the GDP growth have been moved. 4. Calculate the real GDP using GDP deflator by setting 2012 as a base year. 5. Using the real GDP, calculate the real GDP growth rate. 6. Compare the nominal GDP growth rate vs. real GDP growth rate. Which one changes more and why? 7. Can you say that %Normal GDP-%Real GDP+ Inflation Rate? Explain.

Answer 1

Year	CPI	Inflation rate (% CPI)	GDP deflator 2015=100	GDP	% GDP	Real GDP	%RGDP
2012	231.22		95.43	16197
2013	234.72	1.51%	97.11	16785	3.63%
2014	236.27	0.66%	98.94	17522	4.39%
2015	237.83	0.66%	100	18219	3.98%
2016	242.78	2.08%	101.09	18707	2.68%
2017	247.91	2.11%	103.02	19485	4.16%
Inflation rate between 2011 to 2012
((Current period CPI-Prior period CPI)/Prior period CPI)) 100
((234.72-231.22)/231.22))100
(3.5/231.11)100
1.51%
Annual GDP growth rate
Annual GDP growth rate between 2012 and 2013
((Current period GDP-Prior period GDP)/Prior period GDP)) 100
((16785-16197)/16197))100
0.0363