M 1.2 Index Numbers Flashcards
1
Q
Why are index numbers useful?
A
useful way of expressing economic date time series and comparing/ contrasting information
2
Q
What is an index number?
A
a figure reflecting price or quantity compared with a base value
3
Q
Index number formula?
A
index number in year y = data value in year y / base year value
4
Q
What does nominal GDP measure?
A
the value of national output at current prices with no adjustment for inflation
5
Q
What does real GDP measure ?
A
volume of output. It is adjusted for inflation and measured at constant prices
6
Q
How do you calculate the approximate rate of increase of real GDP?
A
rate of increase of nominal GDP - inflation rate
7
Q
How do you calculate the exact real GDP?
A
real GDP in year t = nominal GDp in year t x 100 / price index in year t
