Table 10-3
The table below reports nominal and real GDP for the U.S. from 1929 to 1932. $$\begin{array} { c c c }
\hline \text { Year } & \begin{array} { c }
\text { Nominal } \
\text { GDP }
\end{array} & \text { Real GDP } \
\hline 1929 & 103.6 & 977 \
1930 & 91.2 & 892.8 \
1931 & 76.5 & 834.9 \
1932 & 58.7 & 725.8 \
\hline
\end{array}$$
-Refer to Table 10-3. What is the GDP deflator and the inflation rate for 1931?

Question

Table 10-3
The table below reports nominal and real GDP for the U.S. from 1929 to 1932. $$\begin{array} { c c c } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal } \
\text { GDP }
\end{array} & \text { Real GDP } \
\hline 1929 & 103.6 & 977 \
1930 & 91.2 & 892.8 \
1931 & 76.5 & 834.9 \
1932 & 58.7 & 725.8 \
\hline
\end{array}$$
-Refer to Table 10-3. What is the GDP deflator and the inflation rate for 1931?

Quizplus · Accepted Answer

To calculate the GDP deflator we use the formula: 
GDP deflator = (Nominal GDP/Real GDP) x 100
For 1931, nominal GDP = 76.5 and real GDP = 834.9 
GDP deflator = (76.5/834.9) x 100 = 9.16

To calculate the inflation rate we use the formula: 
Inflation rate = [(GDP deflator in current year - GDP deflator in previous year)/GDP deflator in previous year] x 100 
For 1931, the previous year is 1930 
Inflation rate = [(9.16 - 10.3)/10.3] x 100 = -10.97 ≈ -10.3 (rounded to one decimal place)

Therefore, the best choice is B, with a GDP deflator of 9.16 and an inflation rate of -10.3%.

Table 10-3 the Table Below Reports Nominal and Real GDP

Table 10-3
the Table Below Reports Nominal and Real GDP