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econ3 5-2

# econ3 5-2 - Chapter 5 part 2 1 Nominal GDP a The market...

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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

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1. The average rate of GDP growth is .5 * (5.9% + 5.3%) = 5.6 %
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econ3 5-2 - Chapter 5 part 2 1 Nominal GDP a The market...

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