In this lesson summary review and remind yourself of the key terms and calculations used in calculating real and nominal GDP. Nominal GDP offers a snapshot of a national economy’s value but since it uses current market prices it is greatly influenced by inflation. You will use data on different macroeconomic expenditures to calculate the value of nominal GDP, and its four components, in a particular year. Therefore, the calculation of nominal GDP for the previous year can be done as follows, =1000000000+350000000+5000000000+2500000000-750000000 Name:_____ Course:_____ Section:_____ MEASURING OUTPUT AND INCOME IN-CLASS WORKSHEET 3 (10 points) This question examines the expenditures approach to calculating GDP. Let us take the case of the US to illustrate the formula of the nominal GDP with a … Nominal GDP example. The reason for this should be clear: The value of nominal GDP is “inflated” by inflation. GDP is typically measured as the monetary value … [12] Nominal GDP = ∑ p t q t where p refers to price, q is quantity, and t indicates the year in question (usually the current year).. The total value of sales of french fries in 2010 was 900,000 X $0.50 = $450,000. 40 Readential Pd Investment Ivory Investent Depreciation of Capal Govenment Purchese 60 No idea 1 know it Think so … What Is Nominal GDP? The nominal GDP is modified by the GDP deflator, a measure of relative prices, to arrive at real GDP. Nominal GDP Formula – Example #2. Similarly, as long as inflation is positive, real GDP should be greater than nominal GDP in any year before the base year. Figure 2 shows the U.S. nominal and real GDP since 1960. Use the above information to calculate nominal GDP. The total value of sales of onion rings in 2010 was $840,000. We are given all the variants that are required for calculation and hence we can use the below formula to calculate the nominal GDP. Nominal GDP = $7 + $11 + $5 + ($3 – $2) Nominal GDP = $24 trillion; Therefore, the country produced goods and services that worth nominal GDP of $24 trillion during the year. In 2009 nominal GDP was (1,000,000 X $0.40) + ($800,000 X $0.60) = $400,000 + $480,000 = $880,000. The reason for this should be clear: The value of nominal GDP is “inflated” by inflation. The GDP deflator is composed of price indexes for the two periods being compared. However, it can be misleading to do an apples-to-apples comparison of a GDP of $1 trillion in 2008 with a GDP of $200 billion in … Try It. Expenditures In Casto n billions of dolars) Submit DurblGoods Nondurable Goods Services Nonesdential ed Investment s130 180 250 Do you know the answer? Figure 19.9 shows the U.S. nominal and real GDP since 1960. Nominal GDP is an assessment of economic production in an economy but includes the current prices of goods and services in its calculation. Calculating real vs nominal GDP. 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