Table 19-20
$$\begin{array} { | l | r | r | }
\hline & { \mathbf { 2 0 1 5 } } &{ \mathbf { 2 0 1 6 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 19-20.Given the following information,calculate the rate of increase in the price level from 2015 to 2016.

Question

Table 19-20
 $$\begin{array} { | l | r | r | } 
\hline & { \mathbf { 2 0 1 5 } } &{ \mathbf { 2 0 1 6 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 19-20.Given the following information,calculate the rate of increase in the price level from 2015 to 2016.

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 2015, the nominal GDP deflator was 10,000/9,500 = 1.053. In 2016, the nominal GDP deflator was 12,000/10,500 = 1.143. The percentage change in the nominal GDP deflator from 2015 to 2016 was (1.143 - 1.053)/1.053 * 100 = 8.6%.

Table 19-20 -Refer to Table 19-20