Consider the following table Real GDP (billions of dollars per year, in constant

Question

Consider the following table Real GDP (billions of dollars per year, in constant 2009 dollars 14,873.7 14,418.7 15,020.6 15,583.8 16,341.8 17.136.7 Nominal GDP (billions of dollars perPrice Index Year 2007 2009 2011 2013 2015 2017 14,477.6 14,418.7 15,517.9 16,663.2 17,937.8 19,319.0 (base year 2009) 97.337 100.000 103.311 106.926 109.766 112.735 Change the base year to 2007 in the above problem. Recalculate the price index and then recalculate real GDP for the years in the table below. (Enter your responses for price index rounded to three decimal places and for real GDP rounded to one decimal place.) Real GDP Price Index (billions of dollars per year, in constant 2007 dollars Year(base year 2007) 2007 2009 2011 2013 2015 2017

Explanation / Answer

When base year is 2007,

Price index, year N = (Base 2009 Price index, year N / Price index in year 2007) x 100

= (Base 2009 Price index, year N / 97.337) x 100, and

Real GDP, year N = Nominal GDP, year N / Price index in year 2009

Year Nominal GDP ($B) Price Index (Base 2009) Price Index (Base 2007) Real GDP ($B) (Base 2007) 2007 14,477.6 97.337 100.000 14,477.6 2009 14,418.7 100 102.736 14,034.7 2011 15,517.9 103.311 106.137 14,620.6 2013 16,663.2 106.926 109.851 15,168.9 2015 17,937.8 109.766 112.769 15,906.7 2017 19,319.0 112.735 115.819 16,680.3

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