ECO102H1 Lecture 28: Lecture 28-GDP

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copperclam445

1 Aug 2010

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Thursday, January 28th, 2010.

GDP (Gross Domestic Product)

Definition:

:0HDVXUHRIRXWSXWDQGRILQFRPHVHDUQHGWRSURGXFHRXWSXW

Insight

1. Total expenditures on output = Total incomes earned to produce output

2. Measure using:

Expenditure Approach

Factor Income Approach

Real Vs. Nominal GDP

Nominal GDP: current prices

Real GDP: constant base-year prices

GDP deflator = Nominal GDP * 100

Real GDP

Determining Real GDP (Using GDP Deflator)

GDP deflator = Nominal GDP*100

Real GDP

Real GDP = Nominal GDP*100

GDP Deflator

Example: Nominal GDP = 600

GDP Deflator = 171

Real GDP = 600*100 = 350

171

Implication

% ¨1RPLQDO*'3§ [market value of output in current prices]

% ¨Read GDP [Real output] + % ¨GDP Deflator [Prices]

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Related Questions

The GDP deflator or price index equals:

A. real GDP divided by nominal GDP.

B. nominal GDP divided by real GDP.

C. gross private domestic investment less the consumption of fixed capital.

D. gross national product less net foreign factor income earned in the United States

tangnu832

When GDP is corrected to reflect constant dollars, what is this price corrected GDP called?

a) Net Domestic Product

The following table shows some data for an economy that produces only two goods: milk and honey.

Year	Milk		Honey
	Price	Quantity	Price	Quantity
	($)	(Quarts)	($)	(Quarts)
2016	1	200	2	100
2017	1	400	2	200
2018	2	400	4	200

The following table shows the Nominal GDP, Real GDP, and GDP Deflator for each year listed.

Year	Nominal GDP	Real GDP	GDP Deflator
Year	($)	($)	GDP Deflator
2016	400	400	100
2017	800	800	100
2018	1600	800	200

Compute the % change in the Nominal GDP, Real GDP, and the GDP Deflator in 2017 and 2018 from the preceding year.

Year	% Change in
Year	Nominal GDP	Real GDP	GDP Deflator
2017
2018

From 2016 to 2017, _______ did not change; and from 2017 to 2018, ________ did not change.

Comparing the changes in 2017 and 2018, economic well-being increased more in _________

viridianmosquito683

ECO102H1 Lecture 28: Lecture 28-GDP

ECO102H1 Full Course Notes

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