Table 12-20
$$\begin{array} { | l | r | r | }
\hline & \mathbf { 2 0 1 2 } & { \mathbf { 2 0 1 3 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 12-20.Given the following information,calculate the rate of increase in the price level from 2012 to 2013.

Question

Table 12-20
 $$\begin{array} { | l | r | r | } 
\hline & \mathbf { 2 0 1 2 } & { \mathbf { 2 0 1 3 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 12-20.Given the following information,calculate the rate of increase in the price level from 2012 to 2013.

Quizplus · Accepted Answer

The rate of increase in the price level is calculated as the percentage change in the nominal GDP deflator. The nominal GDP deflator is calculated as nominal GDP divided by real GDP. In 2012, the nominal GDP deflator is 10,000/9,500 = 1.053. In 2013, the nominal GDP deflator is 12,000/10,500 = 1.143. The percentage change in the nominal GDP deflator is (1.143 - 1.053)/1.053 * 100 = 8.6%.

Table 12-20 -Refer to Table 12-20