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(DEF. Current year – DEF. past year / DEF. past year) x 100
5- Economic Growth:
A- Calculating the Final Value of output (Yt)
Yt = Y1 (1+ r)t
Where:-
- ( Y1) is the initial amount
- (r) is the growth rate
- (t) is the number of years of growth
Yt – Y1
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CH3 Numerical problems
GDP / population
7- CPI ( consumer price index) two steps to calculate :-
a. Cost of CPI
P current year x Q base year
b. CPI
(Cost of CPI current year / Cost of CPI current year) x100
GNP / population
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CH3 Numerical problems
Examples
Example1) Use the following data to calculate Nominal GDP, Real GDP
and, GDP deflator:
Year quantity A Price A quantity B Price B
1 50 2 70 3
5 65 2.2 75 3.4
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CH3 Numerical problems
Example2) Use the following data to calculate GDP, GNP & Annual
growth rate of GDP and GNP.
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CH3 Numerical problems
Example3) Use the following data to calculate Per capita GDP, Per capita
GNP & Per capita GDP growth
2 37 90,000 70,000
Solution:
A- Per capita GDP for year 1 = $ 80,00 / 35 = $2,286
B- Per capita GDP for year 2 = $ 90,000 / 37 = $2,432
C- Per capita GNP for year 1 = $ 60,000 / 35 =$ 1,714
D- Per capita GNP for year 2 = $ 70,000 / 37=$ 1,892
E- Per capita GDP growth = ($ 2,432- $ 2,286) / $2,286 X 100 = 6.3 %
F- Per capita GNP growth = ($ 1,892 - $ 1,714) / 1,714) X 100= 10.3%
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CH3 Numerical problems
Example 4) the following table includes the price and number of units
purchased by a typical consumer during 4 years. Compute the CPI for
country X based on the following data:
Product A Product B
Year
quantity price Quantity price
1 50 2.1 70 3.2
2 50 2.5 70 3.5
3 50 3.1 70 4.1
4 50 3.6 70 4.8
Solution
Year Cost of Price Basket CPI
Q P Q P
1 80 10.5 100 6.8
2 80 11.9 100 8.2
3 80 13.5 100 9.3
4 80 14 100 10.5
Compute the following
1- The cost of price basket from year 1 to 4
2- CPI for year 2 based on year 1’s prices.
3- CPI for year 3 based on year 2’s prices.
4- CPI for year 4 based on year 3’s prices.
5- CPI for year 4 based on year 1’s prices.
Solution
Year Cost of price basket CPI
1 1,520 100
2 1,772 116.5
3 2,010 113
4 2,170 108
4 2,170 143
The cost of price basket from year 1 to 4
(Quantity Product A X price Product A) + (Quantity Product B X price
Product A)
CPI = (compared year / base year)*100
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