According to the hypothetical CPI and Nominal GDP data presented below, What is

Question

According to the hypothetical CPI and Nominal GDP data presented below, What is happening to real output in the 2010-2015 period?

increase

decrease

no change

According to the hypothetical CPI, GDP, and population data presented above, what is happening to real output in the 2000-2015 period?

real output is rising

real output is falling

there is no change to real output

According to the hypothetical CPI, GDP, and population data presented above, what is happening to PER-CAPITA real output in the 2000-2015 period?

increase

decrease

no change

According to the hypothetical CPI, GDP, and population data presented above, what is happening to real output in the 2000-2005 period?

real output is rising

real output is falling

there is no change to real output

increase

decrease

no change

Explanation / Answer

Working notes:

(a) Real output = (Nominal GDP / CPI) x 100

(b) Per capita nominal output = Nominal GDP / Population

Per capita real output = (Per capita nominal output / CPI) x 100

(1)

Real output, 2010 = ($5,500,000 / 121) x 100 = $4,545,455

Real output, 2015 = ($6,000,000 / 125) x 100 = $4,800,000

So real output has increased.

(2)

Real output, 2000 = ($4,000,000 / 100) x 100 = $4,000,000

So, between 2000 and 2015, real output is rising.

(3)

Nominal per capita output, 2000 = $4,000,000 / 2,000 = $2,000

Real per capital output, 2000 = $2,000 (being base year)

Nominal per capita output, 2015 = $6,000,000 / 2,400 = $2,500

Real per capital output, 2000 = ($2,500 / 125) x 100 = $2,000

There is no change in real per capita output.

(4)

Real output, 2005 = ($5,000,000 / 110) x 100 = $4,545,455

So, between 2000-2005, real output is rising.

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