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Unformatted text preview: 1-23-08 Chapter 5 part 2 1. Nominal GDP a. The market value of the final goods and services produced in a given year valued at the prices that prevailed in that same year.
b. Current year price → 1999 price for 1999 product c. Market value = price X Quantity 2. Real GDP a. Market value of final goods and services produced in a given year when value at constant prices.
b. Base price is same therefore Quantity got to change in order to change market price
3. In the base year nominal GDP = real GDP 4. Real VS Nominal a. Nominal GDP current year Q and P b. Real GDP current year Q and base year price 5. Chain-weighted Output index a. Index that use the prices of two adjacent years to calculate growth rate of real GDP.
b. Calculation i. $8.5 mil → $ 9 mil ii. ($9 mi - $8.5mil) / $8.5 mil = .059 * 100 = 5.9 % iii. $9.5 mil → $10 mil iv. ($10 mil → $9.5 mil) / $9.5 mil = .053 * 100 = 5.3 % v. Average GDP growth Rate 1. The average rate of GDP growth is .5 * (5.9% + 5.3%) = 5.6 % vi. Chain-weighted output index 1. If 2004 is the base year, then Real GDP 2004 = $ 8.5 mil 2. Production rose 5.6% between 2004 and 2005 3. Thus, we estimate that Real GDP 2005 = $8.98 mil a. Real GDP 2005 = real GDP 2004 * (1 + .056) b. $8.98 mil = ($8.5 mil)(1.056) 6. Price level a. The average of the price that people pay for all the goods and services that they buy as measured by price index.
7. GDP deflator a. The average of current-year prices as a percentage of base-year prices i. GDP deflator = (nominal GDP) / (Real GDP) ii. GDP deflator 1996 = (nominal GDP 1996) / (Real GDP 1996) iii. Nominal GDP 1996 = $4,000,000 iv. Real GDP 1996 = $2,800,000 v. Base money = 1990 vi. GDP deflator = 4mil / 2.8 mil = 1.43 vii. GDP deflator 1990 = 1 viii. GDP deflator 1996 = 1.43 ix. (1.43-1) / 1 = .43 * 100 = 43% x. By 1996 price ↑by 43% ...
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This note was uploaded on 12/02/2009 for the course ECON econ taught by Professor For got during the Spring '09 term at UCSD.
- Spring '09
- for got