Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the relevant price index fell from 100 to 75
a. What was the percentage decline in nominal NNP from 1929 to1933?
b. What was the percentage decline in real NNP from 1929 to 1933? Show your work.
a. NNP measured in current prices is nominal NNP. Nominal NNP fell from $96 billion to $48 billion, a decline of 50 percent.
b. Real NNP is nominal NNP divided by the price index and multiplied by 100 . Real NNP in 1929 was ($96 b/100) 100 = $96 b. Real NNP in 1933 was ($48 b/75) 100 = $64 b. Real NNP fell from $96 billion to $64 billion, a decline of 33 percent.
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