Use the GDP deflator reported in table below to convert the nominal expenditure per capita figures in Table 2.5 into real terms, answering the following questions.
YearGDP Deflator (2005 = 100)
1960……………………… 18.604
1965……………………… 19.919
1970……………………… 24.317
1975……………………… 33.563
1980……………………… 47.751
1985……………………… 61.576
1990……………………… 72.201
1995……………………… 81.536
2000……………………… 88.647
2005………………………100.000
2010………………………110.654
a. Explain how real per capita federal expenditures changed over the period 2000 to 2010. Compare this to the change in nominal per capita federal expenditures.
b. Explain how real per capita state and local government expenditures changed over the period 1995 to 2005. Compare this to the change in nominal per capita state and local government expenditures.
c. Explain how real per capita grants to state and local governments changed over the period 1980 to 1990. Compare this to the change in nominal per capita grants to state and local governments.