1. Interpreting Real Gross Domestic Product First things first… I’m the realest

2. GDP is the value of current production at current prices. Useful to compare across nations in that year. Would this measure be useful over time? Nominal GDP and the amazing growing American economy!! Nominal GDP Real GDP and the kinda amazing growing American economy… Real GDP What changed?? GDP Defined: “The total MARKET VALUE of all FINAL GOODS AND SERVICES produced WITHIN A COUNTRY in ONE YEAR.”

3. GDP is a measure of Price (P) x Quantity (Q) Varying Q will change GDP. So will varying P But varying P doesn’t mean your country produced more… it just got more expensive! That is why we use Real GDP (rGDP). It fixes prices (P) at a point in time, so that we only measure variances in output (Q). Nominal GDP and the amazing growing American economy!! Nominal GDP Real GDP and the kinda amazing growing American economy… Real GDP Real GDP: A measure of aggregate output

4. Calculating real GDP—let’s do this together YearTons of Corn Price per Ton Tons of Soybeans Price per Ton Nominal GDP Real GDP (Base Year 2010) 2010100$10080$50 2011100$11080$100 2012120$120100$100 201380$9070$40 2014150$120100$120

5. What GDP does not measure What would be positive things about one’s life or one’s society that GDP does not capture? What would be some negative things about one’s life or one’s society that GDP does capture?

6. Calculating real GDP—you do this on your own WidgetsGizmosThingamajigs YearPriceQuantityPriceQuantityPriceQuantity 2006$1001$108$54 2007$1101$1110$45 1.Calculate the nominal GDP for: a.2006 b.2007 2.Compute the percentage change in nominal GDP from 2006 to 2007. 3.Using 2006 as the base year, calculate the real GDP for 2007. 4.Compute the percentage change in real GDP from 2006 to 2007.