CAS EC 102 Lecture Notes - Lecture 20: Real Interest Rate, Technology Transfer, Technological Change

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Gdp - market value of all goods and services produced within a country in a year. Y = c + i + g + nx. Real gdp - value of all goods and services measured at a constant price level. Nominal gdp - value of all goods and services measured at current prices. Potential gdp - estimate of what gdp would have been if all the factors of production had been used at normal rates (increasing straight line) Calculate gdp by adding up the value of expenditures on all final goods and services in the economy. = 100 in the base year (nominal gdp = real gdp) Measures changes in price of things that an average consumer buys. (cid:1866)(cid:1858)(cid:1864)(cid:1853)(cid:1872)(cid:1867)(cid:1866) (cid:1854)(cid:1857)(cid:1872)(cid:1875)(cid:1857)(cid:1857)(cid:1866) (cid:1872)(cid:1875)(cid:1867) (cid:1877)(cid:1857)(cid:1853)(cid:1870)(cid:1871) =(cid:3004) (cid:3004) (cid:3004) (cid:1876)(cid:883)(cid:882)(cid:882) Inflation (cid:1866)(cid:1858)(cid:1864)(cid:1853)(cid:1872)(cid:1867)(cid:1866) = % (cid:1876)(cid:883)(cid:882)(cid:882) (cid:1866)(cid:1858)(cid:1864)(cid:1853)(cid:1872)(cid:1867)(cid:1866) (cid:1854)(cid:1857)(cid:1872)(cid:1875)(cid:1857)(cid:1857)(cid:1866) (cid:1872)(cid:1875)(cid:1867) (cid:1877)(cid:1857)(cid:1853)(cid:1870)(cid:1871) = (cid:3008)(cid:3005) (cid:3008)(cid:3005) (cid:1876)(cid:883)(cid:882)(cid:882) (cid:3008)(cid:3005) (cid:3004) (cid:3042)(cid:3039)(cid:3031)(cid:4667) (cid:1866)(cid:1858)(cid:1864)(cid:1853)(cid:1872)(cid:1867)(cid:1866) (cid:1854)(cid:1857)(cid:1872)(cid:1875)(cid:1857)(cid:1857)(cid:1866) (cid:1872)(cid:1875)(cid:1867) (cid:1877)(cid:1857)(cid:1853)(cid:1870)(cid:1871) =$ (cid:4666)(cid:3004) (cid:3041)(cid:3032)(cid:3050) Inflation over time (converting past $ into current $)

Related Questions

7. The difference between nominal GDP and real GDP is that nominal GDP:

	A.	measures a country's production of final goods and services at current market prices, whereas real GDP measures a country's production of final goods and services at the same prices in all years.
	B.	is measured in dollar terms, whereas real GDP is measured in terms of numbers of goods and services produced
	C.	measures the total value of only final goods and services, whereas real GDP measures the value of all goods and services, both intermediate and final
	D.	measures a country's production of final goods and services at fixed prices, whereas real GDP measures a country's production of all final goods and services at current market prices

carminekoala560

Answer at least two parts of this GDP question, which has three parts (A, B, C)

A) Real GDP is the value of goods and services measured in

- Current prices

- Real Prices

- Inflated prices

- Constant (or base prices)

B) Which of the following is a difference between CPI and GDP Deflator?
- Deflator measures the prices of all goods and services, CPI does not

- CPI measures the prices of all goods and services, deflator does not

-Both of the above

-None of the above

C) Which of the following is not a problem with CPI?

a) Substitution bias

b) New goods

c) Quality changes

d) The way GDP deflator is calculated.

Real versus nominal GDP

Consider a simple economy that produces two goods: apples and muffins. The following table shows the prices and quantities of the goods over a three-year period.

Year	Apples		Muffins
	Price	Quantity	Price	Quantity
	(Dollars per apple)	(Number of apples)	(Dollars per muffin)	(Number of muffins)
2008	1	150	2	160
2009	2	135	4	230
2010	3	110	4	165

Use the information from the previous table to fill in the following table.

Year	Nominal GDP	Real GDP
Year	(Dollars)	(The base year 2008, dollars)
2008
2009
2010

1. From 2009 to 2010, nominal GDP (decreased or increased), and real GDP (decreased or increased).

2. Why is real GDP a more accurate measure of an economy's production than nominal GDP?

A. Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.

B. Nominal GDP is adjusted for the effects of inflation or deflation, whereas real GDP is not.

C. Real GDP is not influenced by price changes, but nominal GDP is.

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CAS EC 102 Lecture Notes - Lecture 20: Real Interest Rate, Technology Transfer, Technological Change

CAS EC 102 Full Course Notes

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