Nominal & Real GDP, The GDP Deflator

economy, more, sold, higher, inflation

if GDP grows from one year to the next either

• the ? is producing ? goods and services than before

• goods and services are being ? at ? prices (aka ?)

  • or maybe it’s both!

production, inflation

so basically, if GDP changes, is it because of more ? or increasing ?

Nominal GDP, current

? is the value of a year’s output at ? price levels

• we can’t really tell if production or inflation is the reason GDP is higher

Real GDP, benchmark, constant, not, output

? is the value of a year’s output measured against a ? year

• we do this because keeping price levels ? will prove inflation is ? part of the GDP increase, hence proving that it is definitively due to ?

Calculating Real GDP

1. pick a base year

2. multiply base year price levels by current year’s output levels to find real GDP by adding up all products

earliest

when picking a base year to calculate real GDP, if the base year is not explicitly stated, use the ? given year’s data

GDP Deflator, %

an inflation index that measures the inflation rate per year

• (Nominal GDP / Real GDP) x 100

• Find ? change between 2 years’ GDP deflator values for inflation rate

100, same

the GDP deflator value for base year is always ? since the nGDP and rGDP are the ?

long-run, output, short-run, causes, problems

• in the ?, GDP serves as a road map showing how to keep improving ?

• in the ?, GDP shows the ? or ? to current economic problems

quality, ability, standard

it’s important to note that GDP does not measure the ? of life directly

• GDP merely measures the ? to provide a certain ? of living

excludes

GDP ? impacts on the environment, impacts of non market-based activities, and does not measure content, health, social metrics