In 1995 the Nominal GDP 100 billion and Real GDP 120 billion Calculate the GDP deflator for this economy in 1995 In 1995 the Nominal GDP 100 billion and Real GDP 120 billion Calculate the GDP deflator for this economy in 1995 ID: 588339
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Slide1
FIT GDP ReviewSlide2
In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.Slide3
In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.
GDP
Nominal GDP
Deflator Real GDP
=
X 100Slide4
In 1995 the Nominal GDP = $100 billion and Real GDP = $120 billion. Calculate the GDP deflator for this economy in 1995.
GDP
Nominal GDP
Deflator Real GDP
=
X 100
100
120
X 100 =
83Slide5
The nominal income of an employee in ChuckEcheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?Slide6
The nominal income of an employee in ChuckEcheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?
Real
Nominal income
income Price index
=
X 100Slide7
The nominal income of an employee in Chuckecheese in 1992 was $12,000. The CPI for 1992 (the base year) was 100, and the CPI for 2003 is 115. What would the income of the same employee be in 2003 to keep him at the same purchasing power as in 1992?
Real
Nominal income
income Price index
=
X 100
X__
1.15
X 100 = 12,000
X =
$13,800Slide8
Suppose the following table represents the goods and services produced in a very simple economy. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP.
product
Quantity
Price
Steel
1,000
$100
I
pods
5,000
$300
Autos
500
$25,000
Legal services
100
$2,000Slide9
Suppose the following table represents the goods and services produced in a very simple economy. Assume that steel is used as an input in the production of autos. Using that information, calculate GDP.
(5,000 x $300) + (500 x $25,000) + (100 x $2,000) =
14,200,000
product
Quantity
Price
Steel
1,000
$100
I
pods
5,000
$300
Autos
500
$25,000
Legal services
100
$2,000Slide10
Between 2007 and 2008, if an economy’s exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?
The change in net exports will increase GDP by $16 billionSlide11
Product
Quantity
Price
Movies
20
$6Burgers
100$2Bikes
2
$1,000
Product
Quantity
Price
Movies
30
$7
Burgers
90
$2.5
Bikes
6
$1,100
2002
2007
Suppose that a very simple economy produces three goods: movies, burgers, and bikes. The quantities produced and their corresponding prices for 2002 and 2007 are shown in the table above. What is nominal GDP in 2007?
(30 x $7) + (90 x $2.50) + (6 x $1,100) =
$7,035Slide12
Product
Quantity
Price
Movies
20
$6Burgers
100$2Bikes
2
$1,000
Product
Quantity
Price
Movies
30
$7
Burgers
90
$2.5
Bikes
6
$1,100
2002
2007
What is the real GDP in 2007, using 2002 as the base year?
(30 x $6) + (90 x $2) + (6 x $1,000) =
$6,360Slide13
In nominal GDP rises we can say that a. Production has fallen and prices have risen b. Production has risen and prices remain constant
c. Production has risen or prices have risen or both have risen
d. Prices have risen and production remains constant
e. We can’t say that anything has happenedSlide14
In nominal GDP rises we can say that a. Production has fallen and prices have risen b. Production has risen and prices remain constant
c. Production has risen or prices have risen or both have risen
d. Prices have risen and production remains constant
e. We can’t say that anything has happenedSlide15
You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.Slide16
You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.
Real
nominal income
Income price index in hundredths
=Slide17
You got a job in year 2000 with a salary of $25,000. In 2002, you receive a $2,000 increase in your salary. CPI in 2002 with base year 2000 is 108. Calculate your REAL income in 2000 and 2002. Calculate the percentage change in your real income.
Real
nominal income
Income price index in hundredths
=
2000 Real income = $25,000
2002 Real income =
$27,000
1.08
= $25,000
Change in Real income --- 0%Slide18
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