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# Quantitative Reasoning Explanations

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Show your work at the end of the problems (Excel functions count as work but must be visible from the cell)
The following table shows a nominal GDP and an appropriate price index for a group of selected years.
Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.

1 Year Nominal GDP, \$B Price Index Real GDP, \$B
(1996 = 100)
1960 527.4 22.19 \$x x
1968 911.5 26.29 \$x x
1978 2295.9 48.22 \$x x
1988 4742.5 80.22 \$x x
1998 8790.2 103.22 \$x x

Suppose an economy's real GDP is \$30,000 in year 1 and \$31,200 in year 2.

2 What is the growth rate of its real GDP? x

3 Assume that population is 100 in year 1 and 102 in year 2.
What is the growth rate of GDP per capita? x

If the CPI was 110 last year and is 121 this year

4 What is this year's rate of inflation? x

5 Describe in words - what is the "rule of 70"? x

6 How long would it take for the price level to double if inflation persisted at
2% per year x
5% per year x
10% per year x

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#### Solution Preview

quantitative reasoning
Show your work at the end of the problems (Excel functions count as work but must be visible from the cell)
The following table shows a nominal GDP and an appropriate price index for a group of selected years.
Compute real GDP. Indicate in each calculation whether you are inflating or deflating the nominal GDP data.

1 Year Nominal GDP, \$B Price Index Real GDP, \$B
(1996 = 100)
1960 527.4 22.19 \$x x
1968 911.5 26.29 \$x x
1978 2295.9 48.22 \$x x
1988 4742.5 80.22 \$x x
1998 8790.2 103.22 ...

#### Solution Summary

This solution provides a detailed, step by step explanation of the given question.

\$2.49