Prepare a regression for the nominal GDP OR real GDP to Kroger GROWTH RATE?


Prepare a regression for the nominal GDP OR real GDP to Kroger GROWTH RATE?


Unemployment refers to the economic situation when the people are interested and able to work and they are looking for the work, but are not getting the opportunities. Unemployment hampers the economic growth as that part of labor force is not contributing to the national income.

Answer and Explanation:

The nominal gross domestic product (GDP) and the real GDP are inter-related. Any change in the economic factors which affects the output level or the price level will lead to change the value of the (N) nominal GDP. There will be change in the (R) real GDP with any change in the nominal GDP, keeping other factors constant. The rate of change in the GDP value can be represented by the GDP deflator (D),

{eq}\begin{array}{l} D = \frac{N}{R} \times 100\\ \end{array} {/eq}

While the Kroger growth rate (K) represents the change in the (C) current value of any product or service as compared to the base value. The change is current value can be represented as the change in nominal GDP because nominal GPD is calculated by the actual value of the goods and the services.

The Kroger growth rate can be represented by,

{eq}\begin{array}{l} GR = \frac{{Current - Base}}{{Base}} \times 100\\ GR = \frac{{{N_{Year1}} - {N_{Year0}}}}{{{N_{Year0}}}} \times 100\\ GR = \Delta N \times R \end{array} {/eq}

Growth rate is the product of the change in nominal GDP to the real GDP.

Learn more about this topic:

How to Calculate Real GDP Growth Rates

from Economics 102: Macroeconomics

Chapter 5 / Lesson 7

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