ECO105Y1 Chapter 6: Nominal GDP and Real GDP
Document Summary
Nominal gdp the value at current prices of all final products and services produced annually in a country. Value: (in canadian dollars) the worth of all products and services produced. Current prices: take the price of each final product and service and multiply by the quantity produced. Uses current prices (e. g. when calculating the nominal gdp for 1935, uses the prices and quantities current in 1935) Differences in nominal gdp between years are due to either price changes or quantity changes. If the gdp increase was due to the increased prices, we are no better off. A final product or service is consumed directly by consumers (e. g. bread) Intermediate products: (e. g. ) the flour that the bakery purchases as an input to make the bread. The value of the intermediate products is already included in the value of the final products double counting problem if the value of intermediate products are added. Flow amount per unit of time.
