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Session 2
Instructor Rijan Dhakal
dhakalrijan2010@gmail.com 98510 69004
Practice Problem-1.2 Consumption Income earned by the national abroad Investment Income earned by foreigners at home Capital consumption Indirect Business Tax Government Purchase Net Export Undistributed corporate profit Personal tax payment : 8746.2 : 587.8 : 2103.1 : 287 : 86.6 : 700 : 2363.4 : - 726.9 : 350 : 1650
Calculate National Income (NI) from the above data Answer: 12000
good B
$100
192
$102
200
$100
205
Compute nominal GDP in each year. (Multiply Ps & Qs from same year) Compute real GDP in each year using 2006 as the base year. (Multiply each years Qs by 2006 Ps)
nominal GDP
real GDP
2006: $46,200 2007: $50,000 2008: $52,000 = $30 1050 + $100 205
(billions)
1960
1970
1980
1990
2000
GDP Deflator
The inflation rate is the percentage increase in the overall level of prices. One measure of the price level is the GDP deflator, defined as
Nominal GDP GDP deflator = 100 Real GDP
Use your previous answers to compute the GDP deflator in each year. Use GDP deflator to compute the inflation rate from 2006 to 2007, and from 2007 to 2008.
2.
3.
Every month, collect data on prices of all items in the basket; compute cost of basket
CPI in any month equals
Cost of basket in that month 100 Cost of basket in base period
Answers:
Thank You