(a) Calculate GDP for Country X in 2015.
GDP = Gross Domestic Product = all final goods and services produced in the country in a year.
C = Consumption
I = Investment
G = Government Spending
Xm = Exports – Imports
GDP = C + I + G +(X – m)
$1356 = 745 + 229 + 437 + (234 – 289)
(b) Calculate GNI Gross National Income for Country X in 2015.
GDP + net factor income = GNI
1356 – 111 = $1245 billion
(c) Calculate the rate of consumer price inflation in 2016
Rate of Inflation Formula
(New – Old)/Old x 100
(2016 – 2015)/ 2015 x 100
(109.21 – 105.35)/105.35 x 100
3.86/ 105.35 = .0366 x 100 = 3.66%
(d) Using the GDP deflator, calculate the percentage change in real GDP between 2014 and 2015.
Understand that 2014 is the base year (how do I know?) the deflator and the CPI are both 100 in the base year, always.
In the base year NGDP and RGDP are the same as there is no inflation.
You are given the NGDP of 4465 and this is also the Real GDP (RGDP)
To find Real GDP the formula is
NGDP/ Price Index x 100
NGDP/ Deflator x 100 (This is the one we need)
NGDP/ CPI x 100
4814/105.11 x 100 = (4579.96 RGDP in 2015)
Rate of Change between 2014 & 2015 for the RGDP
(4579.96 – 4465) / 4465 x 100 = 2.57%
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