18 Questions
What was the nominal GDP in 2021?
$255,750
What is Real GDP?
$190,250
How is the GDP deflator calculated?
100 x (Nominal GDP)/(Real GDP)
According to Robert Kennedy's criticism, what does GDP fail to measure?
Devotion to country
What does GDP not value according to the text?
The quality of the environment
What can a large GDP enable a country to afford?
Better schools and healthcare
What does the GDP deflator measure?
The current level of prices relative to the level of prices in the base year
Which year had the highest GDP deflator based on the data provided?
2021
What is the formula for calculating the GDP deflator?
$100 \times \frac{NominalGDP}{RealGDP}$
What does nominal GDP represent?
GDP without accounting for inflation
In 2020, what was the inflation rate based on the provided data?
11.1%
If nominal GDP in a year is $15,000 and real GDP is $12,000, what would be the GDP deflator for that year according to the formula?
$125.0
What is the key difference between nominal GDP and real GDP?
Nominal GDP values output using current prices, while real GDP values output using base year prices.
In the context of calculating nominal GDP, what does the formula $P imes Q$ represent?
Total spending on the good or service
How does real GDP differ from nominal GDP in terms of inflation correction?
Real GDP adjusts for inflation, while nominal GDP does not.
What does the change in real GDP reflect in terms of economic analysis?
Change in quantities only
Why is nominal GDP valuable for assessing economic performance?
It provides a measure of output using current market prices.
How does real GDP help in understanding the true growth of an economy?
By adjusting for inflation and focusing on changes in quantities produced
Test your understanding of calculating nominal GDP using total spending and prices of goods with different quantities over the years. Practice applying the formula to compute nominal GDP in each given year.
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