GDP Calculations

Real GDP-the value of output produced in constant base year prices (can only increase if quantity increases) used to measure comic growth 

Nominal GDP-the value of output produced in current prices (it can increase from year to year if price and quantity increase) used to measure price increases (inflation)

GDP deflator- a price index used to adjust from nominal to real GDP=nominal GDP/ real GDP*100

Consumer price index(CPI)- the most commonly used measurement of inflation for consumers =current year/base year *100

Inflation- taxes those who receive relatively fixed income 

GDP deflator of current year-GDP deflator of base year/base year*100 

In the base year, GDP deflator=100

For years after the base year, GDP deflator is greater than 100

For years before the base year, GDP is less than 100

Real interest rate- adjusted for inflation (nominal interest rate-inflation)

Nominal interest rate- not adjusted for inflation