Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define nominal GDP as spending on output at current prices and real GDP as output at constant base-year prices. (Guide: “Two ways GDP can grow”; Practice Q1)
- I can explain why real GDP, not nominal GDP, shows whether the economy is producing more. (Guide: Worked example 2; Practice Q6(c))
- I can explain why the GDP deflator is 100 in the base year and what a deflator above or below 100 means. (Guide: “The calculations”; Practice Q4)
Calculation
- I can calculate nominal GDP and real GDP from a table of prices and quantities. (Guide: Worked example 1; Practice Q5)
- I can calculate the GDP deflator from nominal and real GDP. (Practice Q2, Q5(b))
- I can convert nominal GDP into real GDP using the deflator, dividing rather than multiplying. (Guide: Worked example 2; Practice Q3, Q6(a))
- I can calculate growth rates of real GDP and nominal GDP, and an inflation rate from the deflator. (Guide: Worked example 1, Step 4; Practice Q6(b))
Reasoning
- I can explain why real GDP is larger than nominal GDP before the base year. (Guide: Worked example 2(d); Practice Q6(d))
- I can show, with numbers, that changing the base year changes measured real growth. (Guide: “Why base-year prices can overstate growth”; Practice Q7(a)–(b))
- I can explain why fixed base-year prices tend to overstate real growth and how chain weighting responds. (Guide: “Why base-year prices can overstate growth”; Practice Q7(c)–(d))
All ticked? Move on to Topic 2.7, Business Cycles, or return to the course roadmap.