00:01
Compute nominal real gdp and gdp deflator using 2020 as the base year.
00:10
So nominal gdp is going to be prices of the current year multiplied by the quantity of the current year.
00:20
So for 2020, nominal gdp is going to be the price of milk times the quantity of milk plus the price of honey times the quantity of honey.
01:03
So we get 200.
01:07
So in this case, real gdp is going to be the same because we haven't had inflation yet.
01:15
Then gdp deflator is nominal gdp over real gdp times 100.
01:34
So we can see that in this case, because they're the same, gdp is just going to be 100 or gdp deflator is 100.
01:52
So then for the year 2021, nominal gdp would be 1 times 200 plus 2 times 100.
02:15
So we're going to have 200 plus 200 is equal to 400.
02:26
So then real gdp, we're going to use the prices from the base year.
02:36
So in the base year, it was $1 for milk.
02:44
So it's the same price.
02:45
And then we're going to multiply by the quantity in the year 2021.
02:50
And then we're going to do the same for honey.
02:55
So in this case, you could see that they actually turn out to be the same for 2021.
03:03
So gdp deflator is again 100.
03:09
So then 2022, we're going to calculate nominal gdp using the current year prices and quantities.
03:23
So we have 2, the price of milk times 200, the quantity of milk plus 4, price of honey times 100, the quantity of honey.
03:33
So that gives you $800.
03:52
So then for real gdp, we're going to use the base year prices.
04:09
So we have $1 for the milk times 200 quarts of milk plus $2 for the honey times 100 quarts of honey.
04:29
So it's equal to 200 plus 200 equals 400...