How to calculate real growth rate when inflation given in CPI? (1 Viewer)

[hins]

Halo,

If i have a nominal economic growth rate for a year, and the consumer price index for that year, how can i calculate the real economic growth rate for that year?

thnx

 

[George W. Bush]

Real = Nominal - Inflation

 

[hins]

But inflation is given in cpi instead of %.

 

[i-color]

inflation = cpi in year 1 - cpi in year 2 divided by cpi in year 1

 

[AGB]

i think the formula u are after is:

real GDP = nominal GDP x (100/CPI)

 

[AGB]

Originally posted by i-color
inflation = cpi in year 1 - cpi in year 2 divided by cpi in year 1

isnt it cpi in year 2 - cpi in year 1 divided by cpi in year 1??

 

[i-color]

oop yeah....hehehe. sorry

 

[hins]

Isn't inflation cpi in year 2 - cpi in year 1 divided by cpi in year 1 and then multiply by 100?

Do many ppl use this formula? :

real GDP = nominal GDP x (100/CPI)

thx

 

[AGB]

Originally posted by hins
Isn't inflation cpi in year 2 - cpi in year 1 divided by cpi in year 1 and then multiply by 100?

yeh then u multiply it by 100 if u want it as a % (normally expressed like that...)

Do many ppl use this formula? :

real GDP = nominal GDP x (100/CPI)

thx

that is the only formula...

 

[tradewind]

what's norminal?

 

[AGB]

Originally posted by tradewind
what's norminal?

nominal GDP is GDP before inflation is taken into account... sort of like a gross measure of GDP....