Presentation is loading. Please wait.

Presentation is loading. Please wait.

Intro to Price index. refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year.

Similar presentations


Presentation on theme: "Intro to Price index. refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year."— Presentation transcript:

1 Intro to Price index

2 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2 2 20 3 3 30 4 4 36 5 5 40 6 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

3 The formula Nominal means current Nominal GDP = Price X Output

4 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16x $2 $32 2 20 x 3 60 3 30 x 4 120 4 36 x 5 180 5 40x 6 240 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

5 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2 $32 2 20 3 60 3 30 4 120 4 36 5 180 5 40 6 240 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 YIIIIKES!!!!!!!!!!! –(c) if year 2 is the base year, give the price index for years 1 through 5

6 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2 2 20 3/3 60 3 30 4 4 36 5 5 40 6 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

7 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2 2 20 3/3 60 100 3 30 4 4 36 5 5 40 6 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

8 The formulae Price Index = nominal price / base year price (times 100) in this case (3/3 = 1) X 100 = 100 Real GDP = nominal GDP / the index (in hundreds)

9 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2 2 20 3/3 60 60 100 3 30 4 4 36 5 5 40 6 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

10 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 2 20 3/3 60 60 100 3 30 4/3 4 36 5/3 5 40 6/3 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

11 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 66.6 2 20 3/3 60 60 100 3 30 4/3 133.3 4 36 5/3 166.6 5 40 6/3 200 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

12 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 $32 66.6 2 20 3/3 60 60 100 3 30 4/3 120 133.3 4 36 5/3 180 166.6 5 40 6/3 240 200 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

13 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 $32/.666 $48 66.6 2 20 3/3 60/1 60 100 3 30 4/3 120/1.33 133.3 4 36 5/3 180/1.67 166.6 5 40 6/3 240/2 200 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

14 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 $32/.67 $48 66.6 2 20 3/3 60/1 60 100 3 30 4/3 120/1.33 90 133.3 4 36 5/3 180/1.67 108 166.6 5 40 6/3 240/2 120 200 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5

15 Did I use a calculator? No I cheated, or used a short cut while the index is 166.6, in hundreds it is 1.66 so the fraction value is 5/3 - I just inverted and multiplied 180 X 3/5 3 X 180 = 540 and 540 / 5 = 180

16 refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Nominal Real Price Year output per unit GDP GDP Index 1 16 $2/3 $32/(2/3) $48 66.6 2 20 3/3 60/1 60 100 3 30 4/3 120/(4/3) 90 133.3 4 36 5/3 180/(5/3) 108 166.6 5 40 6/3 240/2 120 200 Compute –(a) nominal GDP for years 1 thru 5 –(b) real GDP for year 4 –(c) if year 2 is the base year, give the price index for years 1 through 5


Download ppt "Intro to Price index. refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year."

Similar presentations


Ads by Google