I'm pretty sure it should be (CPI current year)/(CPI previous year) to find the rate of inflation... Basically, no, that's wrong is my understanding.For all of you that are wondering what question 12 was:
Year/Nominal GDP/CPI/HDI
1/6000/130/0.61
2/6800/150/0.76
According to the data, which statement is correct for this economy?
a) Real GDP has increased and the quality of life has improved
b) Real GDP has increased and the quality of life has declined
c) Real GDP has decreased and the quality of life has improved
d) Real GDP has decreased and the quality of lie has declined
This is how i worked it out, and what i believe to be right.
The Real GDP Formula is:
CPI previous year
--------------------- x GDP
CPI current year
Therefore:
130
----- x 6000 = 5200
150
This means that REAL GDP has decreased from 6000 to 5200, therefore the answer is C
Anyone disagree with this? Im interested to know because since people are saying its A it will haunt me.