Nominal GDP vs. Real GDP: Which uses base year prices?
Real GDP
Nominal GDP vs. Real GDP: Which is affected by inflation?
Nominal GDP
Nominal GDP vs. Real GDP: Which gives a better measure of economic growth?
Real GDP
GDP Deflator vs. Inflation Rate: How are they related?
Inflation Rate = GDP Deflator - 100
Nominal GDP vs. Real GDP: Which one is always equal in the base year?
They are always equal in the base year.
GDP Deflator vs. CPI: Which measures the price changes of all goods and services in an economy?
GDP Deflator
Nominal GDP growth vs. Real GDP growth: Which one is more likely to be higher during periods of high inflation?
Nominal GDP growth
GDP Deflator vs. CPI: Which one includes the prices of goods and services purchased by the government?
GDP Deflator
Nominal GDP vs. Real GDP: Which is used to calculate the GDP deflator?
Both are used.
Real GDP vs. Potential GDP: What is the difference?
Real GDP is the actual output, potential GDP is the maximum sustainable output.
How can monetary policy affect the difference between nominal and real GDP?
Expansionary policy can increase both, but may lead to a larger increase in nominal GDP due to inflation.
How does fiscal policy influence real GDP?
Government spending and taxation can stimulate or dampen economic activity, directly impacting real GDP.
What is the impact of a supply-side policy on real GDP?
Supply-side policies aim to increase the productive capacity of the economy, leading to a long-term increase in real GDP.
How might trade policies affect nominal vs. real GDP?
Increased exports can boost both, but tariffs could distort prices, affecting nominal GDP more than real GDP.
How does deregulation impact real GDP?
Deregulation can foster competition and efficiency, potentially leading to higher real GDP.
What is the effect of increased government investment in infrastructure on real GDP?
It boosts aggregate demand and enhances productivity, leading to an increase in real GDP.
How does a decrease in income tax rates affect real GDP?
It increases disposable income, boosting consumption and aggregate demand, which can lead to a rise in real GDP.
What is the impact of environmental regulations on real GDP?
While they may initially decrease real GDP due to compliance costs, they can lead to sustainable growth and long-term increases in real GDP.
How do subsidies for renewable energy affect real GDP?
They promote investment in green technologies, fostering innovation and potentially increasing real GDP in the long run.
What is the effect of increased spending on education and training programs on real GDP?
It enhances human capital, boosts productivity, and leads to long-term increases in real GDP.
What is Nominal GDP?
Total value of goods/services using current prices.
What is Real GDP?
A measure of economic growth adjusted for inflation using base year prices.
What is the GDP deflator?
Measures the overall price level in an economy; compares nominal GDP to real GDP.
What does the GDP deflator measure?
The overall price level in an economy.
What is the base year GDP deflator?
Always 100.
What is the purpose of Real GDP?
To give a more accurate picture of economic performance over time.
What is the formula for the GDP Deflator?
(Nominal GDP / Real GDP) * 100
How is the inflation rate calculated using the GDP deflator?
GDP Deflator - 100
Why is Nominal GDP not enough to measure economic growth?
It doesn't account for price changes (inflation).
What prices are used when calculating Real GDP?
Base year prices.
