The table below contains data on the fictional country of Penguinia. Presented a

Question

The table below contains data on the fictional country of Penguinia. Presented are the countries GDP, and the relevant GDP chain price index in an number of years. The base year for chain price index is 2002.

Using the data available in the table, fill in the blank cells with the correct values.

Year: Nominal GDP: Real GDP: GDP Chain Price Index:
2005 $5807 $4044 143.60
2007 $4996 1)??????? 112.14
2009 $5032 $4824 2)????????

3)From 2005 to 2007, nominal GDP....
a) increased
b) decreased

4) while real GDP...
a) increased
b) decreased
by..
a) 8.28%
b) 110.16%
c) 10.16%
d) 9.23%

Explanation / Answer

Real GDP = Nominal GDP/Price index in decimal For 2007, Real GDP = 4996/1.1214 = 4455 ($) 3) from 2005 to 2007, nominal GDP decreased. SO, ANSWER IS OPTION b. 4) while real GDP increased from $4044 to $4455. SO, ANSWER IS OPTION a. Increase is = (4455 - 4044)/4044 *100 = 10.16% SO, ANSWER IS OPTION c.

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