FAQs_chapter5_6 - prices) How do I use the CPI to put...

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How do I calculate nominal GDP? Add up the value of each good produced in that period For example: 2011 Nominal GDP = 2011 P(apples)*2011 Q(apples) + 2011 P(computers)*2011 Q(computers) +…
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How do I calculate real GDP? Add up the quantity of each good produced in that period using base-year prices to get the base-year value of current production For example: 2011 Real GDP in 2009 prices = 2009 P(apples)*2011 Q(apples) + 2009 P(computers)*2011 Q(computers) +…
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How do I calculate the GDP deflator? This is a price index that strips out quantity from the nominal GDP data by dividing nominal GDP by real GDP For example: 2011 GDP deflator in 2009 prices = (2011 Nominal GDP)/(2011 Real GDP in 2009
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Unformatted text preview: prices) How do I use the CPI to put current values in base-year prices? • Divide the current value by the CPI, then multiply times 100. • For example: Current salary in base-year prices = (2011 salary)*(base year cost-of-living) ÷ (current year cost of living) = (2011 salary)*100 ÷ (2011 CPI) How do I use the CPI to put current values in another year’s prices? • Multiply current salary by the ratio of the “other” year’s CPI to this year’s CPIFor example: Current salary in other year’s prices = (2011 salary)*(19XX CPI) ÷ (2011 CPI) = (2011 salary)*(19xx Cost of Living) ÷ (2011 Cost of Living)...
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This note was uploaded on 03/28/2012 for the course ECON 102 taught by Professor Drozd during the Fall '08 term at University of Wisconsin.

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FAQs_chapter5_6 - prices) How do I use the CPI to put...

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