Distinguishing Nominal vs. Real GDP
This description is corrected for inflation.
Real
What types of goods are intended for the end user?
Final goods
What letter denotes GDP in the GDP equation?
Y
22 %
If the nominal interest rate is 7% and the inflation rate is 5% what is the real interest rate?
2%
In what year will nominal GDP always be equal to real GDP?
The base year.
What types of goods are used as components or ingredients to make other goods?
Intermediate goods
what is the defintion of GDP?
The market value of all final goods & services produced within a country in a given period.
What percentage of your grade is from exams?
60 %
What is the nominal and real GDP for the following economy?
year 1: nom = 45 real = 45
year 2: nom= 49 real = 43
year 3: nom = 88 real = 52
When calculating GDP with this description, you will use the quantity in each year multiplied by the base year price.
Real
What type of good is not counted in GDP?
Looking for: Illegal goods
Will also take: intermediate goods.
Consumption, investment, government purchases, and net exports.
When are my SI sessions?
mon @ 1130
tue @ 10
thurs @ 7
What is the GDP deflator for year 2 & 3?
year 2 = 113.95
year 3 = 169.23
What term is defined in the following manner?: The production of goods and services valued at current prices
Nominal GDP
What type of good will work as a subtraction to GDP in the GDP formula?
Imported goods.
GDP includes ...... produced goods,
not goods produced .. ... ....
currently, in the past
When is homework #1 due?
Monday, October 13th.
What is the inflation rate in year 3?
48.51
If nominal GDP is less than real GDP, what is happening in the economy?
Prices are lower than in the base year, which points toward deflation.
Spending on goods that will be used in the future to make more goods is classified as what?
Investment
What is the formula for GDP?
When is your next exam?
Wednesday, October 15th.
Suppose nominal GDP in 2025 is $18 trillion, while real GDP in 2025 is $12 trillion.
a) What is the GDP deflator in 2025?
Now, assume that in 2026, nominal GDP rises to $21.6 trillion, and the GDP deflator increases by 10% compared to 2025.
b) What is real GDP in 2026?
a) 150
b) 13.09 trillion