Discuss the nature and function of a price index

Reference no: EM13816446

Discuss the nature and function of a price index, and describe the difference between nominal and real GDP, by answering the following questions:

1. Assume that nominal GDP for 2012 was $700B with a price index of 110 (using 2004 as the base year). What is the real GDP for 2012?
Remember: To compute the real GDP for any given year use this forrmula: Real GDP = Nominal GDP/Price Index x 100

2. Assume that nominal GDP for 2013 was $850B with a price index of 140 (using 2004 as the base year). What is the Real GDP for 2013?
Remember the fromula :Real GDP = Nominal GDP/Price Index x 100

3. Did real GDP increase or decrease from 2012 to 2013? If it decreased, explain why? Compare your answers form question (1) and (2) above and answer question (3).

4. Why do economists use real GDP, rather than nominal GDP, to measure economic growth?

Reference no: EM13816446

Questions Cloud

Demand and supply of money and interest rates : What is the first action you would take as the president? As the chairman of the Fed and what would be your subsequent steps?

Describe different proposals for change political parties : Describe different proposals for change from both political parties. Summarize key elements of reform that are needed from the perspective of the author of the source used.

Report on transportation methods : Write a 5 page report on transportation methods being specific CARS vs Hybrid cars and its demands elasticity.

Write a summary paper about the story of beowolf : Write a summary paper about the story of beowolf.

Discuss the nature and function of a price index : Discuss the nature and function of a price index, and describe the difference between nominal and real GDP - Compare your answers form question (1) and (2) above and answer question (3).

Aesthetic properties of the website : Discuss the aesthetic properties of the website in terms of white space, font style and color, layout, ease of navigation, etc.

Mental disorders and learning : Mental Disorders and Learning

Write an essay about causes of modern cultural controversies : Write an essay about Causes of Modern Cultural Controversies.

Why is a csr program important : Decide whether or not the company is following exemplary CSR practices, and devise and defend a plan that you, as a manager, could implement to bring it in line with the highest CSR principles.

User Account

All Pages