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Quick Macro question

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  • 07-05-2012 7:31pm
    #1
    Finical
    Registered Users Posts: 1,507 ✭✭✭


    Don't know if this is the right place to put this.

    I just got a short question that's really bugging me in macroeconomics and if anyone could help me it would be great.

    Q: The CSO has provided the following GNP data:
    2008 2009
    Current prices €154,672m €131,241m
    Constant prices €154,672m €138,161m

    The economic growth rate in nominal terms in 2009 rounded to one decimal place
    a) -10.7%
    b) -17.9%
    c) -15.1%
    d) -12.0

    If anyone could show me how to get the correct answer would be greatly appreciated!


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    #2
    Chucky the tree
    Closed Accounts Posts: 19,341 ✭✭✭✭Chucky the tree


    It's the difference between the two years divided by the current year times 100. So basically 2009-2008 = Difference. Difference/2009*100 = answer. Constant prices are nominal.


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    #3
    andrew
    Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 3,368 Mod ✭✭✭✭andrew


    Chucky the tree wrote: »
    It's the difference between the two years divided by the current year times 100. So basically 2009-2008 = Difference. Difference/2009*100 = answer. Constant prices are nominal.

    Wouldn't it be 2008 minus 2009 divided by 2008? Since economic growth in 2009 is the percentage change in 2008's GDP.

    And I think current prices are nominal, since constant prices take into account inflation by setting a base year.


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    #4
    Finical
    Registered Users Posts: 1,507 ✭✭✭Finical


    Yeah I'm not sure is it based from constant or current prices because there is an answer if I try for both sums in the (a)(b)(c)(d) options.


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    #5
    freeze4real
    Registered Users Posts: 2,540 ✭✭✭freeze4real


    Finical wrote: »
    Yeah I'm not sure is it based from constant or current prices because there is an answer if I try for both sums in the (a)(b)(c)(d) options.

    its meant to be new - old divided by old x 100.

    This is a basic formula used in economics.


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    #6
    Chucky the tree
    Closed Accounts Posts: 19,341 ✭✭✭✭Chucky the tree


    andrew wrote: »
    Wouldn't it be 2008 minus 2009 divided by 2008? Since economic growth in 2009 is the percentage change in 2008's GDP.

    And I think current prices are nominal, since constant prices take into account inflation by setting a base year.



    Yea, that's it. Read the first figures as 2009 and not 2008. Can never remember constant or current prices. :o Answer for both is given in the options which didn't help me!


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    #7
    Finical
    Registered Users Posts: 1,507 ✭✭✭Finical


    Thanks a lot guys. It was bugging at me all day!


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