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67- What is nominal and real GDP, and GDP deflator | Nominal v/s real GDP & GDP Deflator - YouTube
Channel: Easy Learning Economics
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guys welcome to easy learning economics
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i am dr caval
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after having been discussed the gdp gnp
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nnp
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personal income personal disposable
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income
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now we are going to learn that what is
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the nominal gdp
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what is real gdp and what is the
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difference between nominal and real gdp
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and what is gdp deflator in this lecture
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we shall learn
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that what is nominal gdp what is
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real gdp what is gdp deflator and what
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are those formulas which we can use to
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calculate the nominal gdp
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and real gdp that what is nominal gdp
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as we know that gdp is the money value
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of all finished goods and services
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produced in a country during a period of
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one year
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so it means the nominal gdp means the
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gdp without adjustment for
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inflation or gdp unadjusted for
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inflation so nominal gdp
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is the measurement of gdp at current
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market price
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when total output is measured at current
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price or existing price is nominal gdp
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it does not require any adjustment for
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inflation and it is the gauge to
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major consumer purchasing power nominal
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gdp
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is generally higher because of increase
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in inflation
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nominal gdp could lead to misleading
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results
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that economy has achieved significant
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growth
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but actually this was the jump in
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general level of price
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nominal gdp is the market value of
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all final goods and services
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produced in an economy during period of
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one year
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final values can be changed due to shift
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in the quantity and price
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increase in nominal gdp in general is an
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indicator of rise
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in general level of price nominal gdp
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can
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increase due to rise in production
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or rise in the general level of price
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then we calculate the inflation or to
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capture the change in production
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what is real gdp gdp after
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adjustment for inflation or adjusted gdp
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is called real gdp it means this is the
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measurement of gdp
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at base or constant market price
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under real gdp total output is measured
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at base year price to reflect the
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changes in real
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output so what is the base year the base
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year is the year with
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prices for other years are compared the
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real gdp
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is the more accurate measure of changes
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in production
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level from one period to another period
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the real gdp shows
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countries increase output after
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adjustment for inflation
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what is the formula to calculate the
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real gdp
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real gdp is called the ratio of nominal
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gdp
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to gdp deflate what is gdp deflator gdp
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deflator is my year of inflation
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where gdp deflator is equal to 1 plus
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inflation rate
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dividing the nominal gdp by gdp deflator
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and multiplying with 100 will give the
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real gdp
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hence deflating nominal into real media
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gdp deflator is a gauge to major
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inflation
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because it measures the changes in the
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price of all goods and services
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produced domestically during a period of
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one year
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whereas cpi means the consumer price
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index
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is mere the changes in price of goods
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and services
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bought by the consumer household and
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governments gdp deflator
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has to compare the real economic
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activities from one period to another
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period
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gdp deflator in the base year is always
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equal to 100.
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it is very difficult to calculate the
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gdp deflator
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because it requires price and quantity
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of
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thousands of product produced every year
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gdp deflator
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is a ratio of nominal gdp to real gdp
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multiplied by hundreds
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so gdp deflator explained that what
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portion of
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nominal gdp has risen due to rise in
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production
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and what portion of nominal gdp has
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increased due to increase in price gdp
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deflator
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it tells that how much gdp has been
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deflated from the base year
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gdp deflator measures the impact of
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inflation on gdp
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in the economy during a period of one
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fiscal year
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and ddp deflator compares the economic
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performances
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and this is used to making investment
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decision and government policy purposes
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what are those formulas so the formula
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for gdp deflator is the ratio of nominal
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gdp to real gdp multiplied by hundred
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the nominal gdp is equals to the gdp
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deflator
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multiplied by real gdp divided by 100
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and real gdp is equal to nominal gdp
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divided by gdp deflator
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i hope it would be clear to all of you
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please let me know your feedback in
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comment box
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and if you're not watching my video on
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gdp gnp
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nnp and how to calculate the gdp
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so you can watch the links are given in
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description thanks for watching
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