Real vs nominal gnp, Managerial Economics

Real Vs Nominal GNP: "Deflating" by a price Index 

One of the problems that confront economists when measuring GNP is that they have to use money as the measuring rod.  These days however, inflation sends the general price level up and up clearly this means that the yardstick stretches in their hands everyday.

Economists repair most of the damage wrought by the elastic yardstick by using a price index.   The price index used to remove inflation (or "deflate'' the GNP) is called the GNP deflator.  The GNP deflator is defined as the ratio of nominal GNP to real GNP.  It is constructed as follows:

GNP Deflator       =     Nominal GNP

                                       Real GNP

Real GNP             =     Value at current Price

                                           CPI

Where CPI is Consumer Price Index

The GNP deflator is useful because it includes prices on all goods and services in GNP.

Posted Date: 11/28/2012 6:00:14 AM | Location : United States







Related Discussions:- Real vs nominal gnp, Assignment Help, Ask Question on Real vs nominal gnp, Get Answer, Expert's Help, Real vs nominal gnp Discussions

Write discussion on Real vs nominal gnp
Your posts are moderated
Related Questions
how much output should a firm produce? 80$ per unit C(Q)=40+8Q+2Qsquared

Features of this system The mixed economy includes elements of both market and planned economies.  The government operates and controls the public sector, which typically cons

Limitation The degree or success with which the central bank can use its bank rate policy to control the total credit in the economy depends upon the interest elasticity of in


Q. Explain about Linear Isoquant? : In this case, isoquant would be straight lines as in Figure below. This type presumes perfect substitutability of factors of production. I

Q. Types of Market Structures by the Nature of Competition? Conventionally, the nature of competition is assayed to be the basic criterion for distinguishing different types of

Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.

Q. Explain about Labour Economies? Labour Economies: As the size of output increases the firm enjoys labour economies because of (a) specialisation, (b) time-saving (c) autom

Increase in demand SS is the supply curve and D 1 D 1 the initial demand curve shifts to the right, to position D 2 D 2 .  P 1 is the initial equilibrium price and q 1

THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups