Up next in Intermediate Math Skills (21 videos)
Brush up on your math with these tutorials.
You Will Need
- Base year
- Base year prices
- Economic activity values
Understand real GDP
Know that a country's GDP is the sum of the prices of all goods and services produced in its economy during a set period of time.
Understand base years
Understand that real GDP is the sum of all produced goods and services at constant prices gleaned from a specified base year. Real GDP permits a comparison of economic growth from year to year in terms of production of goods and services.
Choose a base year
Choose a base year. The prices for this year will be used for the calculations in the other years as well.
Evaluate economic activity
Evaluate economic activity by determining the values of consumer spending, investment, government spending, and net exports in base year prices.
Calculate the sum
Calculate the sum of these separate contributions to GDP. Then compare your country's ranking with that of others.