2.6:Real v. Nominal GDP

Question 1

Nominal GDP

Answer 1

GDP measures in current price. It does not account for inflation from year to year

Question 2

Real GDP

Answer 2

GDP expressed in constant, or unchanging, dollars. Real GDP adjusts for inflation

Question 3

What is better in measuring actual growth? Real or Nominal GDP?

Answer 3

Real GDP

Question 4

GDP Deflator

Answer 4

Measures the prices of all goods produced. Only includes goods and services produced domestically

Question 5

What will show in the GDP deflator but not the CPI?

Answer 5

The increase in price of goods bout by firms or the gov.

Question 6

Difference b/tw GDP Deflator & CPI

Answer 6

CPI measures only the goods & services of consumers

GDP measures prices of all goods and services

Question 7

GDP Deflator Formula

Answer 7

GDP Deflator = Nominal GDP/Real GDP x 100

Question 8

Nominal GDP Formula

Answer 8

Nominal GDP = (GDP Deflator)(Real GDP)/100

Question 9

Real GDP Formula

Answer 9

Nominal GDP/ GDP Deflator *100

Question 10

Real GDP Growth Rate Formula

Answer 10

(Most Recent years real GDP- last years real GDP)/the pervious years real GDP

Question 11

Real Value

Answer 11

Nominal Value/(Price Index/100)

Question 12

Real GDP per Capita

Answer 12

Year 1 real GDP/ population in Year 1

Question 13

Output Growth

Answer 13

(Real FDP in Year 2 - real GDP in Year 1/ real GDP in Year 1 ) *100