## What is the growth rate in nominal GDP between years 2014 and 2015?  What is the growth rate in real GDP between years 2014 and 2015?

Week 5 Homework

• (16 points, 2 per blank and 4 for the last part) Fill in the missing data in the following table.  Use 2013 as the base year.
 Year Nominal GDP Real GDP GDP Deflator 2013 \$100 (a) (b) 2014 (c) \$108 101.8 2015 \$115 \$107 (d) 2016 \$125 (e) 104.2 2017 (f) \$115 110.4

(4 points) What is the growth rate in nominal GDP between years 2014 and 2015?  What is the growth rate in real GDP between years 2014 and 2015?

• (2 points) A friend is reading a financial blog and wants to know if nominal or real GDP is more important.  Which one do you recommend? In one sentence, explain.
• (9 points, 3 points each) The rule of 72 applies in any growth rate application.  Let’s say you have \$1000 in savings in three alternatives. How long would it take to double your savings in each of the three accounts?
1. A savings account earning 1% per year:
2. A U.S. Treasury bond earning 3% interest per year.
3. A stock market mutual fund earning 8% interest per year.