ECON 311 Lecture Notes - Black Market

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3 Feb 2013
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Real gdp and the price level (this is not included in the textbook) The new method of calculating real gdp, which is called the chain-weighted output index method (fisher approach), uses the prices of two adjacent years to calculate the real gdp growth rate. This calculation has four steps described on the next slide. Step 1: value last year"s production and this year"s (2003) production at last year"s prices (2002) and then calculate the growth rate of this number from last year to this year. Step 2: value last year"s production and this year"s production at this year"s prices and then calculate the growth rate of this number from last year to this year. Step 3: calculate the average of the two growth rates. This average growth rate is the growth rate of real gdp from last year to this year. Step 4: repeat steps 1, 2, and 3 for each pair of adjacent years to link real.

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