How to calculate the real GDP and the components of aggregate expenditures?

Economics Dec 09, 2020

Expert Solution

The real GDP of the country is estimated using the prices of products of the base year. It is calculated by determining the change in price due to inflation from the base year to the current year. Real GDP is computed as follows:

Real GDP = (Nominal GDP * 100) / GDP Deflator

The components of aggregate expenditure include consumer spending, investment, net exports, and government spending.

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