ECO 1102 Lecture Notes - Lecture 4: Gdp Deflator

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Golnaz Sedigh

Document Summary

If total spending rises from one year to the next, one of two things must be true: when studying changes in the economy over time, economists want to separate these the economy is producing a larger output of g&s. G&s are being sold at higher prices two effects. Gdp deflator: measure of the price level calculated as the ratio of nominal gdp to real. Gdp times 100 (= nominal gdp/real gdp x 100) *question on midterm! eg: hot dogs and hamburgers (table 5. 3) For real gdp - base year: use base year price, ignore other years" prices, keep other years" quantities the gdp deflator for the base year always equals 100. When economists talk about the economy"s gdp, they usually mean real gdp rather than nominal gdp. When they talk about growth in the economy, they measure the growth of the real gdp. 100)/100]x100=71% eg: gdp defl. yr1 = 171, defl. yr2 = 240, gdp inflation = [(240-171)/171]x100=40%