MKT 504 Lecture Notes - Net Income, Gross Domestic Product, Nominal Interest Rate
Document Summary
In a particular year the (short-term) nominal interest rate on three-month treasury bills averaged. 10. 0%, and the gdp deflator rose from 50. 88 to 55. 22. In year a the inflation rate the proportional rate of increase in the gdp deflator was 55. 22/50. 88 1. Thus the real interest rate in that year was 10. 0% 8. 53% = 1. 467% per year: lower than the real interest rate in year b of 4. 8% 2. 6% = 2. 2% per year. The interest rates on treasury bills, notes and bonds are nominal. Thus, the (short-term) nominal interest rate was 4. 8% per year. The (short-term) real interest rate was the difference between the nominal interest rate and the inflation rate: 4. 8% - 2. 6% = 2. 2% per year. 127,745: using this data calculate gross domestic product (gdp) at market prices, calculate gdp at factor cost, calculate net domestic product (ndp)at factor cost, gdp at market prices = c+i+g+nx.