AP Econ Perio.. . Kelsey Schaffer - 2.6 Real vs 100% 6 4 8 Submit 4 0.= Part 1: Check Your Understanding- Complete the following. 1. If your nominal wage increases by 25%, will you definitely have a 25% increase in purchasing power? Why or why not? 2. If your nominal hourly wage rises from $10 to $12 while the CPI rises from 150 to 180 will your real wage increase, decrease, or stay the same? Explain. Stay the same because the rate of the price change and inflation rate both are the same, which is 20%, so the real wages will stay the same. 3. If nominal GDP increased by 20% and inflation increased by 10%, did the real GDP increase, decrease, or stay the same? Explain? 4. Assume that the nominal GDP is $60 billion and the real GDP is $40 billion. Calculate the GDP deflator. Show your work. 5. Assume that the nominal GDP is $70 billion and the GDP deflator is 140. Calculate the real GDP. Show your work. Part 2: Practice- Use the GDP data below to complete the following. Year Population GDP Deflator Nominal GDP 2019 180 100 $8,000 2020 200 120 $12,000 Page 1 12 2021 300 $15,000 MacBook Air F7 DII F8 DD F6 F10 F11 F5 F9 % 6 8 O = Y U O P