1.

Use following information of an imaginary country:Year 2014 – 20152015– 20162016 - 2017 Nominal GDP6.5 8.49GDP deflator100 140 125 (i) For which year is real GDP and nominal GDP same and why? (ii) Calculate Real GDP for the given years. Is there any year for which Real GDP falls?

Answer»

(i) For the year 2011 as it’s the base year 

(ii) The Real GDP declined in the year 2015-2016. It could be due to high rate of inflation or price levels.

 

Year2014-20152015 - 20162016 – 2017 
Nominal GDP 6.58.4 9
GDP Deflator100140 125 
Real GDP  = (Nominal GDP)/(GDP Deflator) x 1006.567.2



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