Question

Consider the following data on U.S. GDP: Year Nominal GDP GDP Deflator (Billions of dollars) (Base year 2009) 2016 18,707 105.93 1996 8,073 73.18 The growth rate of nominal GDP between 1996 and 2016 was______, and the growth rate of the GDP deflator between 1996 and 2016 was:_______.

Answer 1

Answer:

Data on U.S. GDP

a) The growth rate of nominal GDP between 1996 and 2016 was 131.72%, calculated as follows:

= (2016 nominal GDP - 2009 nominal GDP) / 2009 nominal GDP x 100

= (18,707 - 8,073)/ 8,073 x 100

= 131.72%

b) The growth rate of the GDP deflator between 1996 and 2016 was 44.75%, calculated as follows:

= (2016 GDP deflator - 1996 GDP deflator)/ 1996 GDP deflator x 100

= (105.93 - 73.18)/73.18 x 100

= 44.75%

Explanation:

1. Data on U.S. GDP

Year   Nominal GDP     GDP Deflator (Billions of dollars) (Base year 2009)

2016            18,707           105.93

1996             8,073             73.18

2. According to wikipedia.com, "the GDP deflator (implicit price deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year."

3. Nominal GDP is a way of assessing an economy's economic production.  It includes the current prices of goods and services.  The GDP measures the monetary value of goods and services produced in an economy within a given period.

4. Growth rate refers to the percentage change of a specific variable within a specific time period.  It is calculated as the difference between the current year's variable and the base year's variable, divided by the base year's variable, and then multiplied by 100.