Answer to Question #72671 in Macroeconomics for Sophia

Question

Year Money GDP* Deflator Real GDP**
2013 $ ________ 105 $760 000
2014 $820 000 106 $________
2015 $855 000 ________ $800 000

What is the growth rate of nominal output from 2013 to 2014?

Answer 1

GDP Deflator = Nominal GDP/Real GDP*100
Year Nominal GDP Deflator Real GDP
2013 $7,98,000 105 $7,60,000
2014 $8,20,000 106 $7,73,585
2015 $8,55,000 106.875 $8,00,000
To calculate Nominal GDP growth rate, we apply the formula,
NGDP2014 growth= (NGDP2014 – NGDP2013)/NGDP2013
= [($8,20,00 - $7,98,000)/$7,98,000]*100
NGDP2014 growth= 2.75%
The growth rate of nominal output from 2013 to 2014 IS 2.75%.