Charles Wasson
June 1, 2021
Review Questions from Chapter 1
1. Base year CPI, December 1982 = 100. CPI on December 2019 = 255. What was the
inflation rate for the period 1982-2019
Inflation = (CPIcurrent - CPIpast) / CPIpast
Inflation = ((255 - 100) / 100) * 100 = 155%
2. What was the average inflation rate during the period 1982-2019
Annual/Average inflation = Inflation Rate / Years in Period
Annual Inflation = 155% / 37 = 4.189%
3. Nominal GDP2019 = 21.3 trillion. What was the Real GDP in 1982 prices?
Real GDP at Past Price = (GDP * 100) / Current CPI
Real GDP = ($21.3 trillion * 100) / 255 =$ 8.35294118 Trillion
4. Nominal GDP2019 grew at a rate of 2.7%. What was the real GDP growth if
inflation rate was 2.2% in 2019
Real GDP Growth = Inflation Rate - Inflator
Real GDP Growth = 2.7% - 2.2 = .5%
5. The average 30 year mortgage rate on 2019 was 4.3%, Inflation rate was 2.2%.
What was real mortgage rate?
Real Mortgage Rate = Inflation Rate - Inflator
Real Mortgage Rate = 4.3% - 2.2% = 2.1%