The table above shows aggregate statistical data for Country X in 2018. Assume the GDP deflator is 160.
1 answer:
Answer:
a) The nominal GDP for 2018 stands at $1600,000,000.
b) Economic expenditure and income should ideally balance.
c) The GDP deflator includes all produced goods and services, whereas the CPI deflator focuses solely on consumer-purchased goods and services.
d) The real GDP amounts to $1,000,000,000.
e) It increased by $65 million.
Explanation:
a) The GDP formula is identified as follows:
GDP = Consumption + Investment + Government Spending + Net exports
In terms of variables:
GDP = C + I + G + (X - IM)
Thus, the GDP = 1,000 + 400 + 300 - 100 = 1,600
Hence, the nominal GDP for 2018 equals $1,600,000,000.
b) In this income approach to GDP, the foundation is that the economic expenditure must equate the income produced by the economic activity of goods and services.
c) The distinction between CPI and GDP deflator lies in the fact that GDP deflator includes the prices of both goods and services generated, while CPI deflator relies solely on the prices of goods and services purchased by consumers.
d) Here we see;
Consequently, when the GDP Deflator = 160;
Thus;
The real GDP = $1,000,000,000.
e) The GDP in this scenario will be determined by the end products approach, where the country’s GDP is assessed based on the final sales made by bakeries, resulting in a $65 million increase.
You might be interested in