Real GDP 2006 (2006 base year) Real GDP 2007 (2006 base year)
Cars 10 x $2,000 = $20,000 Cars 10 x $3,000 = $30,000
CPU 4 x $1000 = $4,000 CPU 4 x $500 = $2,000
Oranges 1000 x $1 = $1,000 Oranges 1,000 x $1 = $1,000
in the above table I have 3 sets of goods for both years indicated. 2006 is used as the common price year and I have Nominal GDP and Real GDP calculated in the above table. The question now asks Compute the GDP deflator for 2006 and for 2007 and compute the rate of inflation from 2006 to 2007. I know that to compute the GDP deflator is nominal/real but am I to add up all the goods nominal and real values first and then divide? Or am I supposed to do them separately and have 3 separate GDP deflator values? Also how am I to calculate the rate of inflation? Any help would be appreciated, thanks!
Cars 10 x $2,000 = $20,000 Cars 10 x $3,000 = $30,000
CPU 4 x $1000 = $4,000 CPU 4 x $500 = $2,000
Oranges 1000 x $1 = $1,000 Oranges 1,000 x $1 = $1,000
in the above table I have 3 sets of goods for both years indicated. 2006 is used as the common price year and I have Nominal GDP and Real GDP calculated in the above table. The question now asks Compute the GDP deflator for 2006 and for 2007 and compute the rate of inflation from 2006 to 2007. I know that to compute the GDP deflator is nominal/real but am I to add up all the goods nominal and real values first and then divide? Or am I supposed to do them separately and have 3 separate GDP deflator values? Also how am I to calculate the rate of inflation? Any help would be appreciated, thanks!