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Teachers page: Measuring nominal GDP

Activity handout: Measuring nominal GDP
Dataset:
Curriculum: Economics
Level: 7-8

Web Activity 1: Measuring Nominal GDP

In this activity students are asked to calculate nominal GDP for a number of years (1996 to 2006) from a table of data, using the income and the expenditure methods. The full answers can be viewed on the following link.

National Accounts (Revised): Year ended March 2006

Answer:

Nominal GDP
1998–2006

	1998	1999	2000	2001	2002	2003	2004	2005	2006
	$million	$million	$million	$million	$million	$million	$million	$million	$million
GDP –Income method	101,648	103,432	109,620	115,898	124,621	130,983	139,753	149,143	156,630
GDP – Expenditure method	101,648	103,431	109,620	115,898	124,621	130,983	139,752	148,927	156,088
Statistical discrepancy	-	-	-	-	-	-	-	216	542

Web Activity 2: Rebase of the Consumer Price Index: from base year June 2006 to base year December 1996 and calculation of the quarterly inflation rate.

1. The CPI used in the table shows the CPI as published on the Statistics New Zealand website re-expressed from a June 2006 quarter base = 1000 to a December 1996 base = 1000 using the following formula:(Current Period Index/Base Period Index) * 1000

For example: Dec 2006 = (1005/823)*1000 = 1221.

2. The formula used to calculate the Inflation Rate is as follows:
((Current Period Index/Previous Period Index)-1)*100

For example: Dec 2006 = ((1221/1224)-1)*100 = -0.2%

Answers

Refer to table 2 below and rebase the CPI data to a new base year = December 1996. Calculate the quarterly inflation rate.

Table 2:
        Rebased CPI and Inflation Rates
            Base Year = June 2006

Date	Index	New Index	Inflation rate
Dec. 1996	823	1000	-
Mar. 1997	821	997	-0.3
Jun. 1997	821	998	0.1
Sep. 1997	825	1003	0.5
Dec. 1997	830	1008	0.6
Mar. 1998	831	1010	0.2
Jun. 1998	835	1015	0.5
Sep. 1998	840	1020	0.5
Dec. 1998	833	1012	-0.8
Mar. 1999	830	1009	-0.3
Jun. 1999	832	1011	0.2
Sep. 1999	835	1015	0.4
Dec. 1999	837	1017	0.2
Mar. 2000	843	1024	0.7
Jun. 2000	849	1031	0.7
Sep. 2000	860	1045	1.4
Dec. 2000	870	1058	1.2
Mar. 2001	869	1056	-0.2
Jun. 2001	876	1065	0.9
Sep. 2001	881	1071	0.6
Dec. 2001	886	1077	0.6
Mar. 2002	891	1083	0.6
Jun. 2002	900	1094	1.0
Sep. 2002	904	1099	0.5
Dec. 2002	910	1106	0.6
Mar. 2003	913	1110	0.4
Jun. 2003	913	1110	0.0
Sep. 2003	918	1115	0.5
Dec. 2003	924	1123	0.7
Mar. 2004	928	1127	0.4
Jun. 2004	935	1136	0.8
Sep. 2004	941	1144	0.6
Dec. 2004	949	1154	0.9
Mar. 2005	953	1159	0.4
Jun. 2005	962	1169	0.9
Sep. 2005	973	1182	1.1
Dec. 2005	979	1190	0.7
Mar. 2006	985	1197	0.6
Jun. 2006	1000	1215	1.5
Sep. 2006	1007	1224	0.7
Dec. 2006	1005	1221	-0.2

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Teachers page: Measuring nominal GDP

Web Activity 1: Measuring Nominal GDP