Unit 7 Assignment
Student Name: Magida Taracena
1. Why does inflation make nominal GDP a poor measure of the increase in total production?
-Nominal GDP is the value of final goods and services evaluated at current-year prices and are calculated by summing the current values of final goods and services. In the other hand, the real GDP is and services in the base year to calculate the value of goods and services in all other years. “Real GDP holds prices constant, which makes it a better measure than nominal GDP of changes in the production of goods and services from one year to the next. In fact, growth in the economy is almost always measured
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iv. Fly Cheap Airlines purchases 200 million gallons of fuel. This will not affect any component since expenditure of fuel is an intermediate payment and is not part of GDP.
v. A French citizen purchases a ticket to fly on a Fly Cheap flight from Paris to New York.: This is export expenditure and no, it would not affect GDP. vi. The city of Nashville agrees to spend funds to extend one of the runways so that Fly Cheap will be able to land larger jets: This is government expenditure and would affect the GDP.
3. Use the table to answer the following questions.
Year
Real GDP (Billions of 2000 Dollars)
1993
$7,113
1994
7,101
1995
7,337
1996
7,533
1997
7,836
i. Calculate the growth rate of real GDP for each year from 1994 to 1997.
1994= ((7113-7101)/7113) x100 =. 17%
1995= (7337-7101)/7101) x100 =3.22%
1996= (7533-7337)/7337) x100= 2.67%
1997= (7836-7533)/7533) x100 = 4.02%
ii. Calculate the average annual growth rate of real GDP for the period from 1994 to 1997.
=(.17%+3.22%+2.67%+4.02%) = 10.08/4 =2.52%
iii. How does the average annual growth rate you calculated in (ii) above compare to the average growth rate the U.S. normally expects?
-It is actually much lower than the average growth rate the US normally expects.
4. In an open economy, trade is allowed between countries. Assume a consumer purchases $1,000 worth of furniture manufactured in China. Answer the following:
a. Which component(s) of GDP are impacted by this purchase?
-“The BEA
Question 1 for an average month in 2019, five years hence, assuming that volume is
The following table shows nominal GDP and an appropriate price index for a group of selected years. Compute real GDP for each decade jump. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.
Question 34 Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the questions that follow: Assume that the base year is 2012. What was the growth rate of real GDP between the two years?
In view of the weak economy of the last several years, explain which of the four components of GDP had, or is having, the greatest positive impact in our economy. Use your results from the second e-Activity to support your response.
In the time period shown in the BEA release highlights document (2015, bea.gov), it is clear that real GDP increased 2.0 percent in the third quarter of 2015, according to the third estimate by the BEA. The document also states that the main driver of the increasing GDP is the rise in consumer spending on
Incorrect. The correct answer is B. As explained in Section 2-1, real GDP equals nominal GDP divided by the GDP deflator.
Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The
1. In the last five years the growth in sales for the company has been around 10% per annum, except for the 1997, the growth was 18.78%. In the case, nothing is mentioned that company has made any drastic changes in its strategy to grow faster. In such a scenario, projected a consistent growth of 20% per annum for the next 5 years is too optimistic.
Then, we can get growth rates of 2007 -2011 are 2.46%, 1.76%, 4.09%, 3.61% and 2.78% respectively. Finally, we take the average growth rate of 2.94% as long-term growth rate. The computation is showed in Exhibit 2($ in thousands).
When comparing the economic growth performance of the United States and the United Kingdom, a major indicator is ‘Economic growth’, which measures the yearly rate of development rate of GDP using the
Fiscal policies of the government can have significant impact on the industry’s performance. Governments generally impose high taxes on airline industry, which is passed on to the customers in the form of higher air fares, alternatively airlines reduce the number of staff is cut down costs. An example is United Kingdom, when the UK government imposed high taxes on the aviation industry, the number of cargo operators reduced sharply in order to reduce costs (My-Efficient-Planet, 2010).
The definition of Gross Domestic Product (GDP) defines aggregate output as the dollar value of all final goods and services produced within the borders of a country during a specific period of time, typically a year, while the real GDP is the GDP that has been deflated or inflated to reflect changes in the price level (McConnell, C. (2011). Macroeconomics [VitalSouce bookshelf version]. Retrieved from http://online.vitalsource.com/books/1259174522/epubcfi/6/52). According to BEA, the growth of real GDP decreased one percent in the first quarter of 2014, in the fourth quarter of 2013, the growth of real GDP increased two point six percent (News Release: Gross Domestic Product. (n.d.). News Release: Gross Domestic
*The historical growth rate is actually calculated by getting the averages of the past growth rates being applied (in this case, we used the growth rates from the year 1998 – 2004)
Growth Statistics: The average annual growth rate of real output increased from 1.8 per cent in the period of years between 1980 -1989 to 2.6 percent in 1990 - 2000 gradually it increases to 5.3 percent in 2000 - 2010. In the period of 1980s and 1990s the Africans growth rate has turn millennium and is higher than the average growth rate of world economy .