Use the following data to answer questions 1-3 (be sure to provide all calculations).?

Question

I need this by tomorrow... Pls help


Calculate real GDP for 2005 and 2006 using 2005 prices. By what percent did real GDP grow?
Calculate the value of the price index for GDP for 2006 using 2005 as the base year. By what percent did prices increase?
Now calculate real GDP for 2005 and 2006 using 2006 prices. By what percent did real GDP grow?
Review the GDP information for the past few years from the Bureau of Economic Analysis's Website. Provide a brief summary of the GDP trends over that timeframe and discuss two or three events which may have caused these trends.

Answer 1

You didn't give us the data, but here is what you will need to do. You should have a CPI or other inflation mesure there. If not, you can determine this by taking 2006 prices, subtracting 2005 prices, and dividing by 2005 prices. This will answer question 2, telling you how much prices increased. Then, turn this into a inflation index by adding a 1 to it and multiplying it by 100 so that it is a number like 103. Then, take nominal GDP for 2006 and divide it by the inflation index. That will tell you real GDP for 2006. Real GDP for 2005 is going to be the same as nominal since you are using 2005 prices. To find percentage increase, take real GDP in 2006 minus 2005 divided by 2005.

I would imagine that the trends for GDP will be cyclical like the business cycle. Depending on how far back the data goes, some events to discuss would be the dot com bubble of the 90's, 9/11, and the subsequent expansion afterwards.

Answer 2

That looks like a great question. I will be interested in seeing how you end up answering this for your homework.