Calculations of GDP

Chapter 8.3

Learning outcomes:
Calculate nominal GDP from sets of national
income data using the expenditure
approach.
Calculate GNI/GNP.
Calculate GDP using GDP deflator.

Nominal GDP calculation

Expenditure approach:
C + I + G + (X - M) = GDP
GDP expenditure:
Consumer Spending

10

Investment Spending

Government Spending

6.5

Exports

Imports

10 + 5 (I) + 6.5 (G) + (3 - 2) = GDP

GDP = 22.5

This country is a net exporter of good &

services since they export more than they
import.
If the (X - M) is negative they are a net
importer of goods & services.

Calculating GNP/GNI
GNI/GNP is calculated as follows:
GNI/GNP
GDP + income from abroad - income sent abroad

GDP deflator
A price index used to convert Nominal GDP to
Real GDP.
GDP deflator =

Nominal GDP x 100

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Real GDP

GDP deflator
Calculating Real GDP using the deflator:
Real GDP = Nominal GDP divided by Price Deflator xs 100
Below is the GDP deflator from 2010-14
2010

2011

2012

2013

2014

95.7

97.7

100.0

105.9

102.4

1. 100 = base year

2. 2010-11: prices were less than 2012
3. Prices increased each year from 2010-13 & decreased in
2014.