In this case study we look at some data of Mangoland GDP. The various items listed have been taken from a more general table presented in the CSO publication Economics Trends. it must be emphasized that all components items are evaluated in constant price terms. Thus one of the exercises will be to calculate some “real” growth rates for the Mangoland. Other uses of such data are for interpreting past events and forecasting ones. Theses issues will form the themes of Question 2 and 3.
Questions:
1. Calculate the economic growth rate for the last years. This is derived in percentage terms by taking each year separately. Using the following formula: GDP of year to be measured (e.g.2005) –GDP of previous year (e.g. 2004)* 100 GDP of previous year
2. Try and account for the economic downturn since 2004.
3. Suggest what the Mangoland GDP may be in 2015 and give economic reasons for you estimate.
Year| Nominal GDP| Real GDP| GDP Deflator|
| £ Billion| £ Billion| |
2000| 149| 275| |
2001| 172| 283| |
2002| 200| 276| |
2003| 218| 273| |
2004| 237| 278| |
2005| 260| 289| |
2006| 279| 294| |
2007| 305| 305| |
2008| 322| 314| |
2009| 352| 327| |
Q: 2 work out the implied GDP deflator for each year in the following table
Q: 6 What is the base year: _____________________
Q: 7 by what %age has the real output risen between
a) 2000 and 2004: ______________
The Essay on Economic Topics
Discuss how the government can use discretionary fiscal policy and automatic stabilisers to stabilise fluctuations in real GDP. What tools does the government have at its discretion to stabilise the economy? Suppose the government decides to decrease income taxes. Show in a diagram and explain how this policy will lead to an increase in real GDP. Explain how potential output may be affected. Any ...
b) 2000 and 2007: ______________
c) 2007 and 2009: ______________
