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Canada’s Gross Domestic Product (gdp)

Essay by   •  July 17, 2018  •  Case Study  •  797 Words (4 Pages)  •  725 Views

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Assignment I

Family Name: Nassef

Given Name: Mohamed

Student Number: 8698082

a)

  1. Contents of table
    This table displays Canada’s economic and financial data, as per the International Monetary Fund’s (IMF) Dissemination Standards Bulletin Board (DSBB).
  2. Five level-one headings
    The 5 contents of this table are the Real Sector, Fiscal Sector, Financial Sector, External Sector, and Population, respectively.
  3. Price/Quantity (P and Q) variables
    In regards to the Real Sector, the P variable is the composite index, while the Q value is the Gross Domestic Product (GDP). As for the Financial Sector, the P value is the interest rate, while the Q value is the amount of loanable funds. Finally, for the External Sector, the P value is the exchange rate, while the Q value are the imports/exports.

b)

  1. Contents of table
    This table displays Canada’s Gross Domestic Product (GDP) based on expenditure for the years of 2013-2017.
  2. Six level-one headings
    The six level-one headings are: final consumption expenditure, gross fixed capital formation, investment in inventories, exports of goods and services, less: imports of goods and services, and statistical discrepancy, respectively.
  3. Verification
    1,613,915+472,419+(-487)+(630,353-679,538)+(-1,156) = $2,035,506,000.

c)

  1. Contents of table
    This table displays Canada’s Gross Domestic Product (GDP) based on income for the years of 2013-2017.
  2. Six level-one headings
    The six level-one headings are: compensation of employees, gross operating surplus, gross mixed income, taxes less subsidies on production, taxes less subsidies on products and imports, and statistical discrepancy, respectively.
  3. Verification
    1,044,005+518,979+241,415+90,507+139,443+1,157=$2,035,506,000
    The reason both numbers correspond is the theory that, economically, for every $1 spent, there is $1 earned. In order for a transaction to occur, there has to be a buyer and a seller.
  4. The labour’s share of the national income is:
    (1,004,005/2,035,506 - 1) x 100% = 51.3% (Compensation of employees/GDP)
    The share for corporate profits is: (227,625/2,035,506 - 1) x 100% = 11.2%
    (Net operating surplus/GDP)

[pic 1][pic 2]

[pic 3]

Using the above graph, we can see that the inflation rate reached its peak around 1980, at 12.5% in 1980. It hit its lowest in 1993 at 0.12%, and has since been on a steady path. During the recent years, the annual inflation rate has been steady, despite hitting a low point of 0.26% in the year 2008. The annual inflation rate remained high, up until after 1993 where it remained steady at an average of just under 2%/year.

D)

i) The average annual inflation rate between the year 1990 and 2017 is 1.91%.

((CPIyear2017/CPIyear1990)^(1/27)-1)*100 = 1.91%

e)

i) Using geometric extrapolation, we find that:
CPIyear2017 = CPIyear1990*(1+0.05)^27

CPIyear2017 = 78.4*(1+0.05)^27

CPIyear2017 = 292.7

Therefore, the CPI for 2017, at a constant inflation rate of 5%/year from 1990, would get us to a CPI of 292.7.

ii) At a constant deflation rate of 1%/year from 1990 to 2017:

CPIyear2017 = CPIyear1990*(1-0.01)^27

CPIyear2017 = 78.4*(1-0.01)^27

CPIyear2017 = 59.8

Therefore, the CPI for 2017, at a constant deflation rate of 1%/year from 1990, would get us to a CPI of 59.8.

f)

  1. Sample Table:

Year

Real GDP

Nominal GDP

1980

$625,414,000,000

 $314,390,000,000

1981

$647,323,000,000

 $360,471,000,000

1982

$628,816,000,000

 $379,859,000,000

1983

$645,906,000,000

 $411,386,000,000

1984

$683,462,000,000

 $449,582,000,000

1985

$716,132,000,000

 $485,714,000,000

1986

$733,468,000,000

 $512,541,000,000

1987

$764,664,000,000

 $558,949,000,000

1988

$802,702,000,000

 $613,094,000,000

1989

$823,728,000,000

 $657,728,000,000

1990

$825,318,000,000

 $679,921,000,000

  1. &  iii)[pic 4]

During the period of 1980-2017, a lot of economical activity occurred. During the year 1981 the economy was in a period of recession (lasting about 2 years) that was immediately followed by steady economical growth till the end of the decade. During the early 90s, another recession affected the economy, causing the GDP to slump, then fully recover before the turn of the century. The economy continued to prosper up until the major crash of 2008, which took until 2011 to recover.

iv) The reason both lines intersect in 2002, is because the year 2002 was used as a base year. Since the real GDP does not account for inflation, it would make sense that the nominal GDP (which accounts for inflation) would over-take it during the base year. The nominal GDP rises quicker, due to the fact that when nominal GDP is calculated, inflation must be accounted for, causing the series to rise faster than its counterpart.

Year

 Real GDP

 Nominal GDP

Deflator

% change nominal GDP

real GDP

% change deflator

1980

 $625,414,000,000

 $314,390,000,000

50.27

1981

 $647,323,000,000

 $360,471,000,000

55.69

3.50%

14.66%

10.78%

1982

 $628,816,000,000

 $379,859,000,000

60.41

-2.86%

5.38%

8.48%

1983

 $645,906,000,000

 $411,386,000,000

63.69

2.72%

8.30%

5.43%

1984

 $683,462,000,000

 $449,582,000,000

65.78

5.81%

9.28%

3.28%

1985

 $716,132,000,000

 $485,714,000,000

67.82

4.78%

8.04%

3.11%

1986

 $733,468,000,000

 $512,541,000,000

69.88

2.42%

5.52%

3.03%

1987

 $764,664,000,000

 $558,949,000,000

73.10

4.25%

9.05%

4.61%

1988

 $802,702,000,000

 $613,094,000,000

76.38

4.97%

9.69%

4.49%

1989

 $823,728,000,000

 $657,728,000,000

79.85

2.62%

7.28%

4.54%

1990

 $825,318,000,000

 $679,921,000,000

82.38

0.19%

3.37%

3.18%

1991

 $808,051,000,000

 $685,367,000,000

84.82

-2.09%

0.80%

2.95%

1992

 $815,123,000,000

 $700,480,000,000

85.94

0.88%

2.21%

1.32%

1993

 $834,185,000,000

 $727,184,000,000

87.17

2.34%

3.81%

1.44%

1994

 $874,261,000,000

 $770,873,000,000

88.17

4.80%

6.01%

1.15%

1995

 $898,814,000,000

 $810,426,000,000

90.17

2.81%

5.13%

2.26%

1996

 $913,364,000,000

 $836,864,000,000

91.62

1.62%

3.26%

1.62%

1997

 $951,962,000,000

 $882,733,000,000

92.73

4.23%

5.48%

1.20%

        

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