 FIT GDP REVIEW In 1995 the Nominal GDP

• Slides: 18 FIT GDP REVIEW 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. GDP = Deflator Nominal GDP Real GDP X 100 In 1995 the Nominal GDP = \$100 billion and Real GDP = \$120 billion. Calculate the GDP deflator for this economy in 1995. GDP = Deflator Nominal GDP Real GDP 100 X 100 = 83 120 X 100 The nominal income of an employee in Chuck. Echeese 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? The nominal income of an employee in Chuck. Echeese 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 income = Nominal income Price index X 100 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 income = Nominal income Price index X__ X 100 = 12, 000 1. 15 X = \$13, 800 X 100 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, 000 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, 000 (5, 000 x \$300) + (500 x \$25, 000) + (100 x \$2, 000) = 14, 200, 000 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 billion 2002 2007 Product Quantity Price Movies 20 \$6 Movies 30 \$7 Burgers 100 \$2 Burgers 90 \$2. 5 Bikes 2 \$1, 000 Bikes 6 \$1, 100 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, 035 2002 2007 Product Quantity Price Movies 20 \$6 Movies 30 \$7 Burgers 100 \$2 Burgers 90 \$2. 5 Bikes 2 \$1, 000 Bikes 6 \$1, 100 What is the real GDP in 2007, using 2002 as the base year? (30 x \$6) + (90 x \$2) + (6 x \$1, 000) = \$6, 360 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 happened 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 happened 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. 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 Income = nominal income price index in hundredths 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 Income = nominal income price index in hundredths 2000 Real income = \$25, 000 2002 Real income = \$27, 000 = \$25, 000 1. 08 Change in Real income --- 0% Economics Review Apps Type AP Economics in the search window Download this free app Take the Unit 02: Economic Performance quiz