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Chapter 6: Q 3. (page 160)

Using data from Table 6.5 how much of the nominal GDP growth from 1980 to 1990 was real GDP and how much was inflation?

Short Answer

Expert verified

57% of the growth is inflation and 43% is real GDP growth.

Step by step solution

01

Step 1. Given Information

Table

02

Step 2. Description

From 1980to1990, real GDP grew by

role="math" localid="1646300049192" =(8,225.0-5,926.5)(5,926.5)=39%

Over the same period, prices increased by

=(72.7-48.3)/(48.3/100)=51%

So about 57% of the growth was inflation

=51/(51+39)

The remainder was growth in real GDP, i.e.,

=39/(51+39)=43%

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Most popular questions from this chapter

List some of the reasons why economists should

not consider GDP an effective measure of the standard of living in a country.

Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change

in the broad standard of living.

a. The environment becomes dirtier

b. The crime rate declines

c. A greater variety of goods become available to consumers

d. Infant mortality declines

Why do you suppose that U.S. GDP is so much

higher today than 50 or 100 years ago?

Why do you think that GDP does not grow at a

steady rate, but rather speeds up and slows down?

According to Table 6.7, how long has the average recession lasted since the end of World War II?
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