Year

Nominal GDP in billions of Dollars

Price Index

1960

543.3

19

1965

743.7

20.3

1970

1075.9

24.8

1975

1688.9

34.1

1980

2862.5

48.3

1985

4346.7

62.3

1990

5979.6

72.7

1995

7664

82.0

Complete questions 1-4 to compute real GDP for the given years. To compute real GPD for 1960, you need to know that in 1960 nominal GDP was $543.3 billion and the price index, or GDP deflator, was 19.0.

1.Calculate the real GDP in 1960.

2.Use the same formula to calculate the real GDP in 1965.

3.Continue using this formula to calculate all the real GDP values from 1970 through 1995.

4.After evaluating the data in the table, determine how much of the nominal GDP growth from the years 1980 to 1990 was real GDP and how much was inflation.

5.You're an economist that has just completed analyzing your above calculations.Answer these prompts based on that analysis:

a.Explain if you feel GDP is a good measure of economic growth.

b.Why might you conclude that GDP fluctuates?