Nominal government purchases were $2226.2 billion in 2008 and rose to $2372.8 billion in 2009.Real government purchases were $1940.6 for 2008 and $1958.0 for 2009,where 2005 was the base year.Calculate the percent change in the chain-weight price index for government purchases (rounded to the nearest percentage point)from 2008 to 2009.

Question

Quizplus · Accepted Answer

To calculate the percent change in the chain-weight price index for government purchases, we need to use the following formula:
% Change = [(Real Year 2 * Price Year 2) - (Real Year 1 * Price Year 1)] / [(Real Year 1 * Price Year 1)]

Substituting the values:
% Change = [(1958.0 * 100) - (1940.6 * 100)] / [(1940.6 * 100)]
% Change = (195800 - 194060) / 194060
% Change = 0.0089

Rounding this to the nearest percentage point, we get:
% Change = 0.009 * 100
% Change = 0.9%
% Change = 1%

Therefore, the percent change in the chain-weight price index for government purchases from 2008 to 2009 is 1%, which is closest to option C) 6%.

Nominal Government Purchases Were $2226