ECON 105 Lecture Notes - Lecture 7: Weighted Arithmetic Mean, Market Basket, Gdp Deflator

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Brian Krauth

Document Summary

***** see notebook for table + calculations***** ( 1 ) **notice that some of this growth is due to increased production and some due to increased prices. To isolate production growth we se a statistic called real gdp. Nominal gdp = value goods at current prices. Real gdp = value goods at constant prices from some base year. In our example, let"s choose 2010 as our base year. Base year is adjusted every couple of years. Real gdp in 2010 = 1000 x 3 + 100 x 70. **notice that in the base year, real gdp = nominal gdp real gdp in 2011 = 1050 x 3 + 110 x 70. Growth rate of real gdp = ((10850 - 10000)/10000) x 100% Some issues with real gdp: relative prices change, a lot. In 1910 domestic servants cheap ; silverware cheap ; cars very expensive. down) When there are a lot of something, it gets cheap (demand curves slope.