This preview shows page 1. Sign up to view the full content.
Unformatted text preview: current prices ○ Uses prices of a base year • Real GDP- the production of goods and services valued at constant prices • The base year is the only year where the Nominal GDP and Real GDP are equal = (End GDP - Beg. GDP) / Beg. GDP The growth rate in real GDP is the % change in real GDP • • Net Exports is the value of exports minus the value of imports. • The purchase of stocks and bonds is not considered an investment ○ Buying a house is considered an investment, not a consumption. • Investment is the purchase of plant and machinery to be used in the production of additional goods and services. Real GDP GDP deflator = Nominal GDP x 100 • GDP Deflator- a measure of the price of level calculated as the ratio of nominal GDP to real GDP x 100 • Inflation Rate = % change in the GDP deflator • Increases in inventory is Included in GDP Leisure time is not calculated In GDP Chp. 5 Measuring a Nation's Income Exam 2 Material Page 1...
View Full Document
This note was uploaded on 04/07/2008 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue.
- Fall '08
- Gross Domestic Product (GDP)