Question

1) If nominal GDP is $7636.0 billion and the GDP deflator is 130.2, then what is real GDP? 2) If the Consumer Price Index rose from 166.3 in 1985 to 380.1 in 2010, what would be the inflation rate over this period? 3) In 1990, the CPI was 130.7 and in 1996 the CPI was 156.9. What was the rate of inflation over this period of time? 4) If a price index rose from 14.3 in 1985 to 34.1 in 2010, what would be the inflation rate over the period? 5) At the beginning of 1980 the GDP deflator was 82.4. At the end of 1996 it was 158.6. What is the approximate rate of inflation?

Answer 1

Answer : 1) Real GDP = (Nominal GDP / GDP deflator) × 100

=> Real GDP = (7636 / 130.2) × 100

=> Real GDP = $5864.8

Therefore, real GDP is $5864.8 .

2) Inflation rate = [(Consumer price index of 2010 - Consumer price index of 1985) / Consumer price index of 1985] × 100

=> Inflation rate = [(380.1 - 166.3) / 166.3] × 100

=> Inflation rate = 128.6%

Therefore, based on given information the inflation rate is 128.6% .

3) Inflation rate = [(CPI of 1996 - CPI of 1990) / CPI of 1990] × 100

=> Inflation rate = [(156.9 - 130.7) / 130.7] × 100

=> Inflation rate = 20%

Therefore, based on given informations the inflation rate is 20%.

4) Inflation rate = [(Price index of 2010 - Price index of 1985) / Price index of 1985] × 100

=> Inflation rate = [(34.1 - 14.3) / 14.3] × 100

=> Inflation rate = 138.5%

Therefore, here the inflation rate is 138.5%.

5) Inflation rate = [(GDP deflator of 1996 - GDP deflator of 1980) / GDP deflator of 1980] × 100

=> Inflation rate = [(158.6 - 82.4) / 82.4] × 100

=> Inflation rate = 92.5%

Therefore, here the approximate inflation rate is 92.5%.