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GDP Deflator and Inflation Analysis

The document contains answers to 3 questions regarding GDP, inflation, and labor force statistics: 1. It calculates nominal and real GDP for 2005-2007 using quantity and price data, finds GDP deflators for each year, and inflation rates from 2005-2006 and 2006-2007. 2. It compares the Consumer Price Index and GDP deflator, provides an example CPI calculation for 2007 and 2008 to find inflation, and explains how each measure accounts for price changes. 3. It defines the labor force participation rate and unemployment rate, and calculates each for women in 2015-2016 and 2018, and for men in 2015-2016 and 2018 based on employment and population data.

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Oyon Nur newaz
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105 views5 pages

GDP Deflator and Inflation Analysis

The document contains answers to 3 questions regarding GDP, inflation, and labor force statistics: 1. It calculates nominal and real GDP for 2005-2007 using quantity and price data, finds GDP deflators for each year, and inflation rates from 2005-2006 and 2006-2007. 2. It compares the Consumer Price Index and GDP deflator, provides an example CPI calculation for 2007 and 2008 to find inflation, and explains how each measure accounts for price changes. 3. It defines the labor force participation rate and unemployment rate, and calculates each for women in 2015-2016 and 2018, and for men in 2015-2016 and 2018 based on employment and population data.

Uploaded by

Oyon Nur newaz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Answer to the Question no 1

a. Nominal GDP 2005 = Current year price X Current Year Quantity


= (10x200) + (8x75)
=2600

Nominal GDP 2006 = Current year price X Current Year Quantity


= (14x250) + (10x75)
=4250

Nominal GDP 2007 = Current year price X Current Year Quantity


= (16x350)+ (12x125)
=7100

Real GDP 2005 = Base year price X Current Year quantity


= (10 X 200)+ (8 X 75)
=2600

Real GDP 2006 = Base year price X Current Year quantity


= (10 X 250)+ (8 X 75)
=3250

Real GDP 2007 = Base year price X Current Year quantity


= (10 X 350)+ (8 X 125)
=4750

Nominal GDP
GDP Deflator 2005 : X 100
Real GDP

2600
= x 100
2600

=100%

Nominal GDP
GDP Deflator 2006: X 100
Real GDP
4250
= x 100=130.76 %
3250

Nominal GDP
GDP Deflator 2007 : X 100
Real GDP

7100
= x 100
4750

=149.47%

new−old
b. Inflation rate 2005 to 2006 = x 100
old

130.76−100
= x100
100

=30.76%

new−old
Inflation rate 2006 to 2007 = x 100
old

149.47−130.76
= x100
130.76

=14.30%

new−old
c. GDP Growth rate 2005 2006 = x 100
old

3250−2600
= x100
2600

=25%

new−old
GDP Growth rate 2005 2006 = x 100
old
4750−3250
= x100
3250

=46.1%

Answer to the Question no 2

a. The Difference between Consumer Price Index and GDP Deflator

Consumer Price Index GDP Deflator


measures thee prices of goods and services  Measures the prices of all goods and services
bought by the consumers
includes all goods and services bought here Includes only domestically produced goods
and services
Assigns fixed weights to the prices of Assigns changing weights to prices of
different goods different goods
overstates inflation understates inflation

b. i) 2007

Item Quantity price cost of CPI basket


Rice 90 35 3150
Chicken 30 100 3000
Beed 20 220 4400
Cost of CPI basket in total 20550

base year 2006

Item Quantity price cost of CPI basket


Rice 90 30 2700
Chicken 30 80 2400
Beed 20 180 3600
Cost of CPI basket in total 8700

Cost of basket∈current priod


CPI = x 100
Cost of basket ∈base period

10550
= x 100
8700
=121.26 %

ii) Last year CPI 2007 = 121.26

Base year 2006


cost of CPI basket in base period 8700

2008

Item Quantity price cost of CPI basket


Rice 90 38 3420
Chicken 30 125 3750
Beed 20 240 4800
Cost of CPI basket in total 11970

Cost of basket∈current priod


CPI = x 100
Cost of basket ∈base period

11970
= x 100
8700

=137.5 %

CPI this year −cpi prious year


Inflation rate 2008 = x 100
CPI privious year

137.5−121.26
= x 100
121.26

= 13.39%

Answer To the question no 3

Labor Force
a) Labor Force Participation rate for women LFS 2015-2016 = x 100
Adult Population

20
= x 100
65
= 30.76%

25
And LFS 2018 = x 100
70
= 35.71%

Number of unemployed
b) Unemployment rate for men LFS 2015-2016 = x 100
Labor Force
Labor Force−Employed
= x 100
Labor Force

35−29
= x 100
35

= 1714%

40−35
LFS 2018 = x 100
40
= 1714%

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