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Chapter 20

Chapter 20 – Measuring GDP and Economic Growth.docx

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Department
Economics
Course
Economics 1022A/B
Professor
Jeannie Gillmore
Semester
Winter

Description
Chapter 20 – Measuring GDPand Economic Growth GDP = nominal GDP 2011  GDP = $1,760,011,000,000 2012  GDP = $1,819,967,000,000 Growth rate = 3.4% To calculate growth ratio, the denominator is always the initial number. • Nominal GDP is calculated as production at the prices in the year in which production occurred. • Real GDP is calculated as production at the prices that prevailed in a base year. Example: Measuring GDP in a simple economy 2012 Q 2012 P 2013 Q 2013 P Textbooks 100 $100 110 $120 Milk 406 $2 506 $3 Boots 20 $60 25 $75 Nominal GDP in 2012 = 11,280 Nominal GDP in 2013 = $15, 225 Growth Rate = 35% Base-year method of calculating R
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