Nominal and Real GDP Worksheet

From your text and class notes Nominal GDP is found by measuring current year production times current year prices. Real GDP is found by multiplying production times price using a base year. The base year will be given in your problem. Calculate the deflator by dividing nominal GDP by real GDP and multiply by 100.

Nominal GDP in Year 1 is _____ and nominal GDP in Year 2 is ______ Production Prices Good Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Bananas 200 180 160 2.00 2.40 2.50 Strawberries 80 90 100 3.00 3.20 3.10 Instructions: Use the fixed-weights method and above information about prices of goods in Nanawaiya (an American Indian community) to calculate the economy’s production for the next three questions. Nominal GDP in Year 1 is _____ and nominal GDP in Year 2 is ______ In Year 1 prices, real GDP in Year 2 is _____ and real GDP in Year 3 is _______ Using Year 1’s prices to get real GDP, the GDP fixed-weight deflator for Year 3 is about _________ If nominal GDP is 4,000 wampums and real GDP is 3,000 wampums, the GDP deflator is _____________. Note: a wampum is Native American Indian currency. This PowerPoint format is the format used for your final project which includes the speaker notes.