Exhibit 25-3 $$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Inflation } \
\text { (percent) }
\end{array} & \begin{array} { c }
\text { Real GDP } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline 4.5 & 6,700 \
\hline 3.5 & 6,800 \
\hline 2.5 & 6,900 \
\hline 1.5 & 7,000 \
\hline 5 & 7,100 \
\hline
\end{array}$$
-Suppose the GDP deflator is 100 in 2015 and 101 in 2016.
(A) Suppose the econamy is at potential GDP in 2015 ant 2016 . What is the rate of inflation in 2016 ?
(B) Suppose instead that real GDP is abave patential GDP in 2016. Haw is the adjustrent back ta potential made in this situation?

Question

Exhibit 25-3 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Inflation } \
\text { (percent) }
\end{array} & \begin{array} { c } 
\text { Real GDP } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline 4.5 & 6,700 \
\hline 3.5 & 6,800 \
\hline 2.5 & 6,900 \
\hline 1.5 & 7,000 \
\hline 5 & 7,100 \
\hline
\end{array}$$
-Suppose the GDP deflator is 100 in 2015 and 101 in 2016.
 (A) Suppose the econamy is at potential GDP in 2015 ant 2016 . What is the rate of inflation in 2016 ?
(B) Suppose instead that real GDP is abave patential GDP in 2016. Haw is the adjustrent back ta potential made in this situation?

Quizplus · Accepted Answer

The Answer of Exhibit 25-3 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Inflation } \
\text { (percent) }
\end{array} & \begin{array} { c } 
\text { Real GDP } \
\text { (billions of } \
\text { dollars) }
\end{array} \
\hline 4.5 & 6,700 \
\hline 3.5 & 6,800 \
\hline 2.5 & 6,900 \
\hline 1.5 & 7,000 \
\hline 5 & 7,100 \
\hline
\end{array}$$
-Suppose the GDP deflator is 100 in 2015 and 101 in 2016.
 (A) Suppose the econamy is at potential GDP in 2015 ant 2016 . What is the rate of inflation in 2016 ?
(B) Suppose instead that real GDP is abave patential GDP in 2016. Haw is the adjustrent back ta potential made in this situation?

Exhibit 25-3 -Suppose the GDP Deflator Is 100 in 2015 and 101