1) Given the following information:
Year Nominal GDP Price Deflator Real GDP
2010 $3,405.00 87.2
2011 91 $4,146.20
2012 4038.7 94.4
2013 96.9 $4,405.20
2014 4539.9 $4,539.90
2015 4900.4 103.9
2016 108.5 $4,839.40
2017 5222.2 113.1
2018 117.8 $4,819.60
a) Refer to the above table (figures in billions). The value of the GDP deflator in 2014 is
A) 100.
B) 102.
C) 104.
D) uncertain without more information.
b) Refer to the above table (figures in billions). Between 2014 and 2015 real GDP
A) increased by $191.7 billion.
B) increased by $1.76 billion.
C) increased by $176.17 billion.
D) increased by $360.5 billion.
c) Refer to the above table (figures in billions). The nominal GDP for 2018 is
A) $4819.6 billion.
B) $4091.3 billion.
C) $5677.5 billion.
D) uncertain without more information.
d) Refer to the above table (figures in billions). Real GDP for year 2017 was
A) $4819.6 billion.
B) $5222.2 billion.
C) $4617.3 billion.
D) uncertain without more information.
2) If a nation's nominal GDP is $3,257 million and its price level is 110, then its real GDP is
A) $1960.9 million
B) $24.67 million.
C) $2960.9 million.
D) $2467.42 million.
3) Suppose nominal GDP in Greece decreased by 5% in 2018. Given this information, we know with certainty that
A) the aggregate price level in Greece decreased in 2018.
B) real GDP in Greece decreased in 2018.
C) both the aggregate price level AND real GDP decreased in Greece in 2018.
D) more information is needed to answer this question.
4) Define inflation. Assume that you live in a simple economy in which only three goods are produced and traded: fish, fruit and meat. Suppose that on January the 1st, fish sold for 2,5 € per kilo, meat was 3 € per kilo and fruit was 1,5 € per kilo.
At the end of the year, you discover that the catch was low and that fish prices had increased to 5 € per kilo, but fruit prices stayed at 1,5 € and meat prices had actually fallen to 2 €.
Can you say what happened to the overall "price level"?
How might you construct a measure of the change in the price level?