Thanks to visit codestin.com
Credit goes to www.scribd.com

Scribd
Upload
145 views12 pages

Real GDP, Nominal GDP & GDP Per Capita: By-Ankit Pokhrel

The document discusses real GDP, nominal GDP, and GDP per capita. It defines GDP as the total value of goods and services produced within a country in a given year, and explains how GDP is calculated using the product, expenditure, and income approaches. The document also distinguishes between nominal GDP measured at current prices and real GDP adjusted for inflation.

Uploaded by

Ankit Pokhrel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
145 views12 pages

Real GDP, Nominal GDP & GDP Per Capita: By-Ankit Pokhrel

The document discusses real GDP, nominal GDP, and GDP per capita. It defines GDP as the total value of goods and services produced within a country in a given year, and explains how GDP is calculated using the product, expenditure, and income approaches. The document also distinguishes between nominal GDP measured at current prices and real GDP adjusted for inflation.

Uploaded by

Ankit Pokhrel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 12

Real GDP, Nominal GDP

& GDP per capita


By- Ankit Pokhrel
1 GDP: Gross Domestic Product
GDP is the dollar value of all FINAL goods and services produced within a
country’s borders in a given year.

◦ The best known and most widely used measure of aggregate economic activity.

◦ Total income of a nation

◦ Measure of nation’s economic well-being

◦ Measure of a nation’s economic growth from one period to the next


Calculation of GDP

GDP can be calculated three ways:


◦ Product Approach: Add up the value added of all producers

◦ Expenditure Approach: Add up all spending on domestically-


produced final goods and services.

◦ Income Approach: Add up all income paid to factors of production


Expenditures Approach

Four components of GDP:

◦ Consumer Spending © - Consumption by households

◦ Investments (I) - Investment by businesses and households

◦ Government Spending (G) – Government expenditures by local, state, and


federal government

◦ Net Exports (NX) - Exports (X) – Imports (M)

GDP = C + I + G + NX
When GDP is computed in the current year’s prices, rising
prices (inflation) can make it difficult to determine if a
change in GDP from one year to the next is due to the
country’s production of more goods and services or to
increases in the price level.
Nominal GDP vs Real GDP

Nominal GDP Real GDP


GDP measured by calculating GDP in current GDP measured by calculating GDP with base year’s
year’s prices. price.

It does not account for inflation from year to year. Real GDP adjusts for inflation.

If nominal GDP rises from one year to the next,


one of two things must be true: The economy is An increase in real GDP is an increase in economic
producing a larger output of goods and services, growth.
and/or goods and services are being sold at higher
prices.
Nominal GDP vs Real GDP
What’s not included in the GDP?

◦ Intermediate goods
◦ Second hand/Used goods
◦ Underground production (black market)
◦ Bonds or Stocks
◦ Household production
◦ Transfer payments
2 GDP per capita

10
GDP per capita

◦ Real GDP per capita is real GDP divided by the total


population.

◦ It identifies on average how many products each person


makes.

◦ GDP per capita is a global measure for gauging the


prosperity of nations and is used by economists, along with
GDP, to analyze the prosperity of a country based on its
economic growth.

11
Thanks!

You might also like