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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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