Nominal GDP in a country was $8759.9 billion in 2014 and $9254.6 billion in 2015. The GDP deflator was 102.86 for 2014 and 104.37 for 2015
(a) What is the growth rate of nominal GDP between 2014 and 2015?
(b) What is the inflation rate from 2014 to 2015?
(c) What is the growth rate of real GDP from 2014 to 2015?
(a) 9254.6/8759.9 × 100% = 5.6%.
(b) [(104.37/102.86 ) - 1] × 100% = 1.5%.
(c) Real GDP (2014 ) = 8759.9/1.0286 = 8516.3.
Real GDP (2015 ) = 9254.6/1.0437 = 8867.1.
Growth rate = [(8867.1/8516.3 ) - 1] × 100% = 4.1%.
Note that the growth rate of nominal GDP (5.6%) equals the inflation rate (1.5%) plus the growth rate of real GDP (4.1%).
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