EXERCISE (ex. 3, p. 44)

EXERCISE

(ex. 3, p. 44)

SOLUTION

GDP at current prices in 2005: 1718047 million euros

STEP 1: calculate GDP at current prices in 2006-2009 (a)

HOW: multiply GDP at current prices (a) from the previous year by growth rate GDP (1) REMEMBER: growth by e.g. 2,47 corresponds to multiplication by 1,0247

GDP at current prices in 2006 = 1718047 * 1,0247 ; GDP at current prices in 2008 = 1800798 * 0,9992 etc.

STEP 2: calculate the price index

HOW: multiply price index from the previous year (b) by growth rate deflator from the current year (2)

REMEMBER: price index for 2005 = 100

For example:

-> price index 2006 = 100,00 * 1,0214 = 102,14 -> price index 2009 = 107,45 * 1,0072 = 108,22

STEP 3: calculate GDP in volume, at 2005 prices, multiplying 100 by GDP at current prices divided by price index

STEP 4: calculate GDP growth rate in volume by dividing c) from the current year by c) from the previous year

Thank you for your

attention