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  • ECO102 Lecture 02

Real GDP

• Real GDP is Nominal GDP - Inflation to give you the real gdp growth.

ECO102

• Detangle what's the increase in price changes or increase in production changes.
• Volume of output
• $\begin{array}{cccccccc}& 2013& & 2014& & 2015& & 2016\\ & \text{Vol}& \text{Price}& \text{Vol}& \text{Price}& \text{Vol}& \text{Price}& \text{Vol}& \text{Price}\\ \text{Good X}& 10& 2& 10& 2& 15& 4& 20& 5\\ \text{Service Y}& 5& 1& 10& 2& 10& 2& 20& 5\\ \text{GDP}& 25& & 40& & 80& & 200\\ \text{\%}\mathrm{\Delta }& & 60& & 100& & 250\\ \text{Q Index}& & & 30& & 50& & 120\\ \text{\% Change in RGDP}& & & 20\mathrm{\%}& & 25\mathrm{\%}& & 50\mathrm{\%}\\ \text{Real GDP}& & & 40& & 50& & 75\end{array}$
• $\text{Q Index}$ is last year's prices to evaluate this years GDP
• This is a quantity index with prices as weights