Measuring Real GDP Year Market price Quantity produced Total value of

Measuring real gdp year market price quantity

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Measuring Real GDP Year Market price ( £ ) Quantity produced Total value of production ( £ ) 2005 apples 1 100 1 × 100 = 100 oranges 2 50 2 × 50 = 100 Real GDP at 2005 prices 200 2006 apples 2 150 1 × 150 = 150 oranges 3 100 2 × 100 = 200 Real GDP at 2005 prices 350 2007 apples 3 200 1 × 200 = 200 oranges 4 150 2 × 150 = 300 Real GDP at 2005 prices 500 6 / 11
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GDP Deflator Nominal GDP Real GDP GDP deflator = nominal GDP real GDP × 100 2005 200 200 1 2006 600 350 600 350 × 100 = 171 2007 1200 500 1200 500 × 100 = 240 Usefulness: To deflate (i.e. take inflation out of) nominal GDP to yield real GDP: real GDP = nominal GDP (GDP deflator / 100) 7 / 11
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Measuring GDP by Output Rules: Exclude used goods Exclude intermediate goods Impute a value for goods/services not sold in the marketplace, e.g. police, home ownership 8 / 11
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Measuring GDP by Income Factor of production Factor income Land rent Labour wage Capital interest Entrepreneur profit TOTAL GDP 9 / 11
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Measuring GDP by Expenditure Sector Expenditure on final goods Individuals consumption ( C ) Firms investment ( I ) Government consumption ( G ) Foreigners net exports ( NX ) TOTAL GDP = C + I + G + NX 10 / 11
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Final Remarks, Announcements Q&A (on this lecture) private/administrative questions – check Moodle first, then email me THE END 11 / 11
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  • Spring '14
  • Dr.GonzaloForgues-Puccio
  • Economics, gross domestic product

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