Name: Date: Period: 1. The CPI in 2015 was 130. The CPI in 2016 was 102. What s the rate of inflation/deflation?

Transcription

1 Name: Date: Period: 1. The CPI in 2015 was 130. The CPI in 2016 was 102. What s the rate of inflation/deflation? 2. The market basket price of all goods and services in 1982 was $10,400. The market basket price of all goods and services in 1992 was $45,200. a. Assume 1982 is the base year. What was the CPI in 1992? Round to the nearest whole number. b. Calculate the rate of inflation from 1982 to 1992? 3. Nominal GDP in 2011 was $19,000. Real GDP in 2011 was $3,000. What is the GDP deflator for 2011? Round to the nearest whole number. 4. The GDP deflator in 2013 was 350. Nominal GDP in 2013 was $12,000. What was Real GDP for 2013? Round to the nearest whole number. 5. Using your answers and information from questions 3 and 4 above, what conclusion can you make about price levels from 2011 to 2013 and at what rate did they increase or decrease? 6. Who? ANSWERS: % deflaiton 2. a. 435 b. 335% $3, Price levels decreased by 44.7% 6. Chad Johnson!

2 Name: Date: Period: COMPLETE ON THE SHEET 1. Year Units of Output Price Per Unit $7 Nominal GDP Real GDP (Year 1995 as base year) GDP Deflator Inflation Rate (from year to year) $ $ $ $90 COMPLETE ON THE SHEET 2. Year Units of Output Price Per Unit 1 9 $4 Nominal GDP Real GDP (Year 2 as base year) GDP Deflator RGDP Growth Rate (from year to year) 2 23 $ $ $ $230 CALCULATIONS ACTIVITY 3 1. Real interest is 30% while inflation is 10%. What is the nominal rate of interest? 2. Nominal interest is 30% while real interest is 10%. What is the inflation rate? 3. The inflation rate is 30% while nominal interest is 10%. What is the real interest? 4. Jim s nominal income is 40,000 but his real income is 30,000. What is the CPI?

3 ANSWERS: Complete ON THE SHEET 1. Year Units of Output Price Per Unit Nominal GDP Real GDP (Year 1995 as base year) GDP Deflator Inflation Rate (from year to year) $7 $630 $8, CHAD JOHNSON! $30 $3,000 $9, % $60 $9,000 $13, % $50 $10,000 $18, % $90 $22,500 $22, % COMPLETE ON THE SHEET 2. Year Units of Output Price Per Unit Nominal GDP Real GDP (Year 2 as base year) GDP Deflator RGDP Growth Rate (from year to year) 1 9 $4 $36 $ JERRY STACKHOUSE 2 23 $7 $161 $ % 3 78 $12 $936 $ % 4 98 $18 $1,764 $ % $230 $202,170 $6,153 3, % CALCULATIONS ACTIVITY 3 1. Real interest is 30% while inflation is 10%. What is the nominal rate of interest? 40% 2. Nominal interest is 30% while real interest is 10%. What is the inflation rate? 20% 3. The inflation rate is 30% while nominal interest is 10%. What is the real interest? -20% 4. Jim s nominal income is 40,000 but his real income is 30,000. What is the CPI? 133

4 1. In 1995 the NGDP = $190 billion and RGDP = $192 billion. Calculate the GDP deflator for this economy in We have the following data on nominal GDP and the real GDP for 2002 and 2003: Nominal GDP $130 billion $191 billion Real GDP (base year 1992) $118 billion $126 billion Calculate the GDP deflator for 2002 and 2003 and also calculate the annual inflation rate in the GDP deflator. 3. In an economy, RGDP for year 2002 (base year = 1996) is $220 billion and the GDP deflator 2002 (base year = 1996) is 170. Calculate the NGDP for An economy s NGDP, RGDP, and GDP deflator data are given as follows (in billions of $) NGDP RGDP 13 GDP deflator 136 a) Fill in the blanks and show your work. Round to the nearest whole number. b) Calculate the annual rate of growth of GDP from 2001 to 2002.

5 1. In 1995 the NGDP = $190 billion and RGDP = $192 billion. Calculate the GDP deflator for this economy in We have the following data on nominal GDP and the real GDP for 2002 and 2003: Nominal GDP $130 billion $191 billion Real GDP (base year 1992) $118 billion $126 billion Calculate the GDP deflator for 2002 and 2003 and also calculate the annual inflation rate in the GDP deflator. Deflators: ; Inflation: 38% 3. In an economy, RGDP for year 2002 (base year = 1996) is $220 billion and the GDP deflator 2002 (base year = 1996) is 170. Calculate the NGDP for $374 billion 4. An economy s NGDP, RGDP, and GDP deflator data are given as follows (in billions of $) NGDP RGDP GDP deflator a) Fill in the blanks and show your work. Round to the nearest whole number. -7% b) Calculate the annual rate of growth of GDP from 2001 to 2002.

6 Name: Date: Period: 1. Output and prices in Gala Land: This year s output This year s price 900 loaves of bread $9 per loaf 1,500 gallons of water $3 per gallon 600 pieces of fruit $1 per piece Gala Land produces three final goods: bread, water, and fruit. The table above shows this year s output and price for each good. A. Calculate this year s Nominal GDP B. Assume that in Gala Land the GDP deflator (GDP price index) is 140 in the base year and 190 this year. Calculate each of the following: i. The inflation rate, expressed as a percentage between the base year and this year. ii. This year s real GDP. C. Since the base year, workers have received a 30 percent increase in their nominal wages. If workers face the same inflation that you calculated in Part B, i, what has happened to their real wages? Explain. D. If the GDP deflator in Gala Land increases unexpectedly, would a borrower with a fixed-interest-rate loan be better off or worse off? Explain.

7 Name: Date: Period: 1. Output and prices in Gala Land: This year s output This year s price 900 loaves of bread $9 per loaf 1,500 gallons of water $3 per gallon 600 pieces of fruit $1 per piece Gala Land produces three final goods: bread, water, and fruit. The table above shows this year s output and price for each good. A. Calculate this year s Nominal GDP $13,200 B. Assume that in Gala Land the GDP deflator (GDP price index) is 140 in the base year and 190 this year. Calculate each of the following: i. The inflation rate, expressed as a percentage between the base year and this year. 36% $6,947 ii. This year s real GDP. C. Since the base year, workers have received a 30 percent increase in their nominal wages. If workers face the same inflation that you calculated in Part B, i, what has happened to their real wages? Explain. They have decreased. Inflation > nom wage increase, ergo their incomes have less purchasing power. D. If the GDP deflator in Gala Land increases unexpectedly, would a borrower with a fixed-interest-rate loan be better off or worse off? Explain. Better off. Inflation would be increasing, however their nominal loan interest stays the same, therefore their real rate of interest would fall. Chad.

8 2. We have the following data on nominal GDP and the real GDP for 2008 and 2009: Year: Nominal GDP $384 billion $675 billion Real GDP (Base year 1982) $327 billion $521 billion A. Calculate the GDP deflator in 2008 and B. What was the rate at which Real GDP increased/decreased from 2008 to 2009? C. Calculate the rate of inflation/deflation from 2008 to What does this number tell us? 3. The CPI in 2015 was 190. Jim s nominal income in 2015 was $400,000. What is Jim s real income?

9 2. We have the following data on nominal GDP and the real GDP for 2008 and 2009: Year: Nominal GDP $384 billion $675 billion Real GDP (Base year 1982) $327 billion $521 billion A. Calculate the GDP deflator in 2008 and ! ! 130 B. What was the rate at which Real GDP increased/decreased from 2008 to 2009? Fiddy-nine percent increase C. Calculate the rate of inflation/deflation from 2008 to What does this number tell us? 11%; the overall price level increased in this society by 11%. 3. The CPI in 2015 was 190. Jim s nominal income in 2015 was $400,000. What is Jim s real income? $210,526