Explore BrainMass

Explore BrainMass

    nominal GDP and real GDP

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is nominal GDP? What is real GDP? What is included in each? Why are these measures important? What do they tell us? What was GDP for the last two years (taken from the BEA)?

    © BrainMass Inc. brainmass.com September 29, 2022, 2:14 pm ad1c9bdddf
    https://brainmass.com/economics/bonds/nominal-gdp-and-real-gdp-426257

    Attachments

    Solution Preview

    Nominal and Real GDP:

    Gross domestic product is the sum of values of goods and services produced over a certain period of time by a region mostly a country (Gross Domestic, 2010). It is used to indicate products and services generated from a specific territory and do not include income received over the period. Gross domestic product can be used to determine a country's national income and also its economic output.

    The difference between nominal GDP and real GDP is that nominal GDP considers the total amount of money used on gross domestic product while real GDP does not factor in effects of inflation when determining gross domestic product (Gross Domestic, 2010). Values provided in nominal GDP are expressed in current market prices while values in real GDP eliminate changes in price due to deflation or inflation by using prices of some base year.

    Factors of GDP:
    Personal consumption:

    The first component of gross domestic product is personal consumption which consists of household purchases involving durable and non durable goods and services. Factors of GDP (2011) provide that personal consumption expenditure is the highest component of gross ...

    Solution Summary

    Nominal and Real GDP are clarified in this solution.

    $2.49

    ADVERTISEMENT