{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FAQs_chapter5_6

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

This preview shows pages 1–5. Sign up to view the full content.

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) +…

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
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) +…
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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

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)...
View Full Document

{[ snackBarMessage ]}