This exercise deals with approximating growth rates of combined quantities, e. g., nominal GDP YNOM,t =...
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This exercise deals with approximating growth rates of "combined quantities", e. g., nominal GDP YNOM,t = Yt Pt, with real GDP Y, and the GDP deflator Pt, or real GDP per capita, with population St. (a) Show that the growth rate of YNOM,t is approximately equal to the sum of the Pt-Pt-1. growth rate of Y, and the inflation rate T = Pt-1 GYNOM,t-1,t gy,t-1,t + Tt Hint: First, show that: GYNOM,t-1,t = 9Y,t-1,t + Tt + gy,t-1,t (b) Show that the growth rate of real GDP per capita the difference of the growth rates of Y₁ and St: 9,t-1,t9Y,t-1,t - 9s,t-1,t Hint: Denote real GDP per capita by yt = Yt=yt St. (c) Consider a closed economy: Show that: gy,t-1,t = Ct-1 Y₁-1 Y = Ct + It + Gt • gc,t-1,t + It-1 Yt-1 t • 91,t-1,t + is approximately equal to and note that by definition Gt-1 Yt-1 9G,t-1,t The quantity 190,t-1,t is referred to as contribution of consumption (or of consumption growth) to GDP growth - and similarly for the other terms. This exercise deals with approximating growth rates of "combined quantities", e. g., nominal GDP YNOM,t = Yt Pt, with real GDP Y, and the GDP deflator Pt, or real GDP per capita, with population St. (a) Show that the growth rate of YNOM,t is approximately equal to the sum of the Pt-Pt-1. growth rate of Y, and the inflation rate T = Pt-1 GYNOM,t-1,t gy,t-1,t + Tt Hint: First, show that: GYNOM,t-1,t = 9Y,t-1,t + Tt + gy,t-1,t (b) Show that the growth rate of real GDP per capita the difference of the growth rates of Y₁ and St: 9,t-1,t9Y,t-1,t - 9s,t-1,t Hint: Denote real GDP per capita by yt = Yt=yt St. (c) Consider a closed economy: Show that: gy,t-1,t = Ct-1 Y₁-1 Y = Ct + It + Gt • gc,t-1,t + It-1 Yt-1 t • 91,t-1,t + is approximately equal to and note that by definition Gt-1 Yt-1 9G,t-1,t The quantity 190,t-1,t is referred to as contribution of consumption (or of consumption growth) to GDP growth - and similarly for the other terms.
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Related Book For
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
Posted Date:
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