2.1.1 Economic growth

• Nominal GDP is the total value of all goods and services produced at current prices
• Real GDP adjusts for inflation using a GDP deflator.
• How is Per Capita GDP calculated?

  $Per \ Capita \ GDP =$$\frac{Total \ GDP}{Population}$
• Real GDP is calculated by dividing Nominal GDP by the GDP deflator
• What does Per Capita GDP represent?

  Average GDP per person
• Nominal GDP reflects current market values without adjusting for inflation.
• Real GDP is calculated as Real GDP = \frac{Nominal GDP}{GDP \ Deflator} \times 100</latex>
• What is the formula for calculating Real GDP?

  $Real GDP =$$\frac{Nominal GDP}{GDP \ Deflator} \times 100$
• The GDP deflator is used to adjust Nominal GDP to calculate Real GDP.
• Which type of GDP is used to track actual economic growth?

  Real GDP
• Per Capita GDP is used to assess living standards.
• Real GDP is calculated by dividing Nominal GDP by the GDP deflator
• What is the formula for calculating Per Capita GDP?

  Per \ Capita \ GDP = \frac{Total \ GDP}{Population}</latex>
• Real GDP provides a more accurate measure of economic growth than Nominal GDP.
• What does GDP measure in an economy?

  Economic growth
• Nominal GDP is calculated using current prices
• Real GDP adjusts for inflation using a GDP deflator.
• How is Per Capita GDP calculated?

  Total GDP divided by population
• Nominal GDP shows overall economic activity
• Real GDP tracks actual economic growth by adjusting for inflation.
• What does Per Capita GDP assess?

  Living standards
• GDP is a primary measure of economic growth
• What is Nominal GDP measured in?

  Current prices
• The GDP deflator is used to calculate Real GDP.
• What does Per Capita GDP indicate about a country?

  Average GDP per person
• Steps to calculate Real GDP and Per Capita GDP

  1️⃣ Calculate Nominal GDP

  2️⃣ Calculate GDP deflator

  3️⃣ Calculate Real GDP using the formula

  4️⃣ Calculate Total Population

  5️⃣ Calculate Per Capita GDP using the formula
• Match the GDP type with its definition:

  Nominal GDP ↔️ Total value at current prices

  Real GDP ↔️ Total value at constant prices

  Per Capita GDP ↔️ GDP divided by population
• Nominal GDP is adjusted for inflation to track actual growth.

  False
• What does economic growth refer to?

  Increase in total value of goods and services
• Real GDP is preferred over nominal GDP because it accounts for inflation
• Per capita GDP measures the average output per person in an economy.
• Match the measurement type with its definition:

  Nominal GDP ↔️ Total value at current prices

  Real GDP ↔️ Total value at constant prices

  Per capita GDP ↔️ Total GDP divided by population
• Order the three main types of GDP according to their ability to account for inflation:

  1️⃣ Nominal GDP

  2️⃣ Real GDP

  3️⃣ Per capita GDP
• What is the formula for calculating real GDP using nominal GDP and the GDP deflator?

  $Real GDP =$$\frac{Nominal GDP}{GDP \ Deflator} \times 100$
• Per capita GDP is calculated by dividing total GDP by the population.
• Real GDP is calculated using a GDP deflator
• What is the formula for calculating the GDP growth rate?

  GDP \ growth \ rate = \frac{(GDP_{current} - GDP_{previous})}{GDP_{previous}} \times 100</latex>
• If the GDP in the previous year was $100 billion and the current GDP is $105 billion, the growth rate is 5%
• What is the formula for calculating the GDP growth rate?

  $GDP \ growth \ rate =$$\frac{(GDP_{current} - GDP_{previous})}{GDP_{previous}} \times 100$
• The GDP growth rate is the percentage increase in the value of goods and services produced in an economy from one period