Question

A country’s real gdp rose from 500 to 550 while its nominal gdp rose from 600 to 770. what was this country’s inflation rate?

Answer 1

The inflation rate can be calculated by finding the difference between the nominal GDP growth and the real GDP growth, and then dividing it by the real GDP growth. In this case, the inflation rate is 240%.

Step-by-step explanation:

The inflation rate can be calculated by finding the difference between the nominal GDP growth and the real GDP growth, and then dividing it by the real GDP growth. In this case, the nominal GDP rose from 600 to 770, which is an increase of 170. The real GDP rose from 500 to 550, which is an increase of 50. Therefore, the inflation rate is (170 - 50) / 50 = 240%.

Answer 2

The inflation rate is 16.67%. To find this, we first need to compute the GDP deflator for each year and then we need to calculate the percent change in the GDP deflator. The GDP deflator is given by GDPdef=(nominal GDP/Real GDP)*100. For the first year, the GDP deflator is 120. For the second year it is 140. Percent change is given by [(new value - old value)/old value]*100. Plugging in 140 for the new value and and 120 for the old value, we see get that the percent change is 16.6667. Thus the inflation rate is approximately 16.67%.