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Questions and Answers
What does GDP stand for?
What does GDP stand for?
Gross Domestic Product
What does GNI stand for?
What does GNI stand for?
Gross National Income
Gross Domestic Product (GDP) is only calculated for a specific year, not a time period
Gross Domestic Product (GDP) is only calculated for a specific year, not a time period
False
Real GDP is not adjusted for inflation.
Real GDP is not adjusted for inflation.
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What is a price index?
What is a price index?
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What does the GDP deflator measure?
What does the GDP deflator measure?
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What is Real GDP?
What is Real GDP?
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Study Notes
Gross Domestic Product (GDP) and Gross National Income (GNI)
- GDP is the total value of all final goods and services produced in a country over a period (usually a year).
- GDP includes:
- Consumer spending (C)
- Investment (I) by businesses
- Government spending (G)
- Net exports (X-M), where X is exports and M is imports.
- GNI = GDP + net income from abroad
GDP - Measures Economic Output
- Nominal GDP - measures the value of current output at current prices
- Real GDP - measures the value of current output at constant (a year) prices to allow for the impact of inflation.
Price Index
- A price index is a measure of average prices in one period relative to average prices in a base year.
GDP Deflator
- GDP deflator = (Nominal GDP / Real GDP) x 100
- GDP deflator - measures the reduction in the value of all of the goods and services produced in an economy, when inflation is taken into account.
Real GDP
- Real GDP = Nominal GDP / Price Deflator x 100
- Real GDP - a price index used to convert nominal GDP to real GDP.
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