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Activity: Free Market and Businesses

- Sa

Part D

When comparing GDP from one year to another, you need to adjust each year's GDP for any inflation

that occurs during that year. To do this, you need to find real GDP. To find real GDP, or the value of GDP

that takes into account any price changes in the period, use this formula:

real GDP =

nominal GDP

Hettator for same year

100

You found the nominal GDP for two years in partc, but you will need to find the value of the deflators

before you can use the formula. Price deflators neutralize any inflation that happened that year. Using

this table of price deflator data e, find the price deflators for gross domestic product (line 1) for the

fourth quarter (IV) in the years you used in partc and record them in the table.

B IV X X 10pt

BA

A

Year

Deflator Value