Question

Significance of using the ngdp and rgdp to measure gdp deflator

Answer 1

Answer:

Explanation:

Like the Consumer Price Index (CPI), the GDP deflator is a measure of price inflation/deflation with respect to a specific base year. Similar to the CPI, the GDP deflator of the base year itself is equal to 100. ... However, trends in the GDP deflator will be similar to trends in the CPI.

Answer 2

Nominal GDP includes both prices and growth, while real GDP is pure growth. It's what nominal GDP would have been if there were no price changes from the base year. As a result, nominal GDP is higher.

The US Bureau of Economic Analysis reports and nominal GDP. It calculates real US GDP as an annual rate from a designated base year. It excludes imports and foreign income from American companies and people. That negates the impact of exchange rates.

The formula for real GDP is nominal GDP divided by the deflator :

R = N / D