ECN 203 Lecture Notes - Lecture 18: Gdp Deflator
Document Summary
All the spending on the goods and services purchased by the govt at the federal, state, and local levels. Ex: social security or unemployment insurance benefits. Imports are portions of c, i, an g that are spend on g&s produced abroad. Nx is usually negative because we usually import more than we export. Inflation can distort economic variables, so we have two versions of gdp. Inflation is the rate at which general prices of goods and services is rising. (don"t want gdp to increase due to inflation) Does not determine if increase in gdp is due to rise in price or rise in amount produced. Values output using the prices of a base year. Calculate: keep the price the same as the base year. Ex: 10 (price of 2011) x 100 (amount of 2011) The measure of the overall level of prices. Gdp deflator = 100 x (nominal gdp / real gdp)
