【正文】 price index to determine real GDP YEAR Pizza Price Beer Price Movie Price Cover Charge Total Cost 2021 2021 2021 57 using price index to determine real GDP YEAR Total Cost Price Index Inflation Rate 2021 2021 ？ 2021 ？ 58 using price index to determine real GDP To determine the price index, we first have to choose a base year. Let 2021 be the base year. So the 2021 price index = Then, 2021 Price Index = Price of Market Basket in 2021 X 100 Price of Same Basket in 2021 = 59 using price index to determine real GDP Inflation Rate: The % change in the price index over time. 2021 Inflation Rate = 2021 Index – 2021 Index X 100 2021 Index 60 using price index to determine real GDP Inflation Rate: The % change in the price index over time. CAREFUL!! 2021 Inflation Rate = 2021 Index – 2021 Index X 100 2021 Index 61 using price index to determine real GDP Different Base Years. We chose to use 2021 as a base year. But, we can just as easily choose 2021, 2021. How do the results differ? 62 using price index to determine real GDP Example: Do the same calculations using 2021 as a base year. 2021 Index = 100 2021 Index = Price of Basket in 2021 X 100 Price of Basket in 2021 2021 Index = Price of Basket in 2021 X 100 Price of Basket in 2021 63 using price index to determine real GDP YEAR Total Cost Price Index Inflation Rate 2021 2021 2021 64 using price index to determine real GDP Different Base Years. We chose to use 2021 as a base year. But, we can just as easily choose 2021, 2021. How do the results differ? ? Index will be less than 100 in 2021, 2021 (since basket is cheaper) ? Inflation rate should be exactly the same. ? Difference here is only due to rounding. 65 using price index to determine real GDP Example: CPI （ Consumer Price Index, 消費(fèi)者物價指數(shù)） Statistics Canada Price Index Based on prices of 600 goods and services from an average household?s expenditure: food, housing, transportation, furniture, clothing, and recreation. Basket is weighted based on expenditure patterns (. since people tend to spend more on food than clothing, changes in the price of food have a bigger impact on the index than changes in the prices of clothing). 66 Example: CPI Bank of Canada ? tracks changes in the CPI in deciding whether or not to adjust moary policy to maintain an inflation rate within the inflationcontrol target it has set. using price index to determine real GDP 67 Example: CPI Bank of Canada ? Uses core CPI – excludes the eight most volatile ponents (fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products) as well as the effect of changes in indirect taxes on the remaining ponents. 不穩(wěn)定的、可變的 using price index to determine real GDP 68 Example: CPI Statistics Canada Price Index The Numbers: Consumer Price Index, by Consumer Price Index, by Careful: the city CPI does not give parisons across cities. using price index to determine real GDP 69 Since 2021, the price index used to calculate REAL GDP is a chain weighted index (Fisher Index) which is adjusted annually to better reflect weights of each category. The details of this aren?t important. The text goes into more detail if you are interested. using price index to determine real GDP 70 So, now that we know about Price Indices… Back to GDP To find REAL GDP, we inflate or deflate based on the price index. REAL GDP = Nominal GDP X 100 Price Index using price index to determine real GDP 71 using price index to determine real GDP YEAR Price Index Nominal GDP Real GDP 2021 100 300 2021 400 2021 451 72 using price index to determine real GDP method 1: price indices method 2: calculate gdp at base prices for each physical output ? Gather separate data on physical outputs ? Determine market value of each output with base year prices (rather than current prices) 73 Main Points 1. Definition of GDP 2. How it is measured – Expenditure Approach – Value Added Approach – Ine Approach 3. Nominal vs. Real GDP – Price Indices Sidebar – GDP deflator – Shortings of GDP – As a measure of output – As a measure of wellbeing 74 The GDP Deflator (GDP縮減指數(shù) ) Ex: Nominal GDP in 2021 = Price (2021) X Output (2021) Real GDP in 2021 = Price (2021) X Output (2021) where 2021 is the base year 75 calculating GDP at base year prices YEAR 202