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Lecture 28

Lecture 28-GDP


Department
Economics
Course Code
ECO102H1
Professor
Jack Carr
Lecture
28

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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
or
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
Ù
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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