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
What is the role of scarcity in management decisions-making

Question 1: Martha National County Club is a golf club in an isolated wealthy community and accepts only females as members. There are 1,000 identical female members of the club an

Technically Efficient Method of Production Let's suppose that commodity X is produced by two methods by employing capital and labour: Factor inputs Met

Q. Explain the Shut down point? ShutdownPoint: With MR = MC, firm attains equilibrium at point E where it produces OM amount of the output. To produce this output, firm incur

how sample size technique is helpful in demand forecasting of a particular product?

Explain about the Pricing analysis Microeconomic methods are employed to examine lots of pricing decisions. This includes transfer pricing, price discrimination, joint product

how realistic is the sales maximization model from experience with business objectives as pursued by Zimbabwean firms

Producers Equilibrium or Optimal Combination of Inputs  The analysis of production function has demonstrated that alternative combinations of factors of production that are tech

Q. Construction of the causal model - regression analysis? The construction of an explanatory model is a crucial step in the regression analysis. It should be defined with refe

Question 1: a. What are the different channels of monetary policy? b. Discuss why the channels of monetary policy are likely to change in the wake of financial liberaliz