Question

If nominal output rises from $$\$ 13.5$$ billion to $$\$ 14$$ billion and the GDP deflator rises from 100 to 105 , a. What is the percentage increase in nominal output? b. What is the percentage increase in the price index? c. What has happened to real output? d. By how much would the price index have had to rise for real income to remain constant? LO6

   If nominal output rises from $$\$ 13.5$$ billion to $$\$ 14$$ billion and the GDP deflator rises from 100 to 105 ,
a. What is the percentage increase in nominal output?
b. What is the percentage increase in the price index?
c. What has happened to real output?
d. By how much would the price index have had to rise for real income to remain constant? LO6

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Macroeconomics

David Colander 8th Edition

Chapter 7, Problem 15

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Step 1

To find the percentage increase in nominal output, use the formula: \[ \text{Percentage Increase} = \left(\frac{\text{New Value} - \text{Old Value}}{\text{Old Value}}\right) \times 100\% \] Plugging in the values: \[ \text{Percentage Increase} = \left(\frac{\$14 Show more…

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If nominal output rises from $$\$ 13.5$$ billion to $$\$ 14$$ billion and the GDP deflator rises from 100 to 105 , a. What is the percentage increase in nominal output? b. What is the percentage increase in the price index? c. What has happened to real output? d. By how much would the price index have had to rise for real income to remain constant? LO6

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