Suppose all the dollar values in the following data are in 2000 dollars. Consump

Question

Suppose all the dollar values in the following data are in 2000 dollars. Consumption $200 billion Depreciation 20 Retained earnings 12 Gross investment 40 Imports 70 Exports 50 Net foreign factor income 10 Government purchases 80 Instructions: Enter your response rounded to the nearest whole number. How much is GDP? $ billion Use the Consumer Price Index shown and convert GDP to 2013 dollars. Consumer Price Index Year Index (all items) Percent Change 2000 172.2 3.4 2001 177.1 2.8 2002 179.7 1.6 2003 184.0 2.6 2004 188.9 2.7 2005 195.3 3.4 2006 201.6 3.2 2007 207.3 2.8 2008 215.3 3.8 2009 214.5 -0.4 2010 218.1 1.6 2011 224.9 3.2 2012 229.6 2.1 2013 233.0 1.5 What is the value of that GDP in 2013 dollars? (Convert the figures from their nominal to their real values with 2013 as the base year; use the following formula: CPI2/CPI1 = GDP2/GDP1.) Instructions: Enter your response rounded to the nearest whole number. $ 460.02 billion

Explanation / Answer

Answer:

GDP = C+ I + G + X - M

= (200 + 40 + 80 + 50 - 70 )

= $ 300 billion.

Value of GDP in 2013 dollars = 300*(233.0/172.2)

= $ 406 billion.

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