Assume That Between Two Periods, GDP of a European Country

question 27

Essay

Assume that between two periods, GDP of a European country measured in current prices fell from €96 billion to €48 billion. Over the same period, the relevant price index fell from 100 to 75.
a. What was the percentage decline in nominal GDP during the period?
b. What was the percentage decline in real GDP during this period? Show your work.

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Definitions:

Schedule E

A tax document utilized to declare earnings and deficits from real estate rentals, royalty payments, partnerships, S corporations, estates, and trusts.

Schedule D

A form used with IRS tax returns to report capital gains and losses from transactions of capital assets.

Schedule K-1

A tax document issued for an investment in partnership entities, used to report the income, losses, and dividends of partners.

1099-MISC

An Internal Revenue Service (IRS) tax form used in the U.S. to report payments made in the course of a trade or business to individuals who are not employees.