LECTURE%20NOTES%2012

# LECTURE%20NOTES%2012 - University of Modern Sciences...

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University of Modern Sciences & Arts (MSA) Calculation of GDP, unemployment and inflation rates Dr. Heba Helmy ECO-101 Lecture notes 12 PROBLEM SOLVING SESSION CALCULATION OF REAL AND NOMINAL GDP, UNEMPLOYMENT AND INFLATION RATES SOLVED EXAMPLE 1 IF YOU HAVE THE FOLLOWING TABLE YEAR FOOD HOUSING MACHINES PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY 1992 12 4 9 3 20 2 1994 14 5 10 3 20 2 1) CALCULATE THE NOMINAL AND REAL GDP FOR THE YEAR 1994 2) CALCULATE THE GDP GROWTH RATE SOLUTION 1) NOMINAL GDP 1994 = SUM OF 1994 (CURRENT YEAR) PRICES X 1994 (CURRENT YEAR QUANTITIES) = P1 XQ1 = (14 X 5) + (10 X 3) + (20 X 2) = 70 +30 +40 =140 REAL GDP 1994 = SUM OF 1992 (BASE YEAR) PRICES X 1994 (CURRENT YEAR QUANTITIES) = P0 X Q1 = (12 X5) + (9 X 3) + (20 X 2) = 60 +27 + 40 = 127 2) GROWTH RATE OF GDP = REAL GDP IN YEAR 2 – REAL GDP IN YEAR 1 X 100 -------------------------------------------------------------- REAL GDP IN YEAR 1 IN 1992 BASE YEAR PRICES AND CURRENT PRICES ARE THE SAME THEREFORE REAL GDP IN 1992 = NOMINAL GDP IN 1992

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LECTURE%20NOTES%2012 - University of Modern Sciences...

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