02/01/16      Gross Domestic Product Cont...

National Income- (Personal Household + Taxes + Gov't Transfer Payment)

Nominal GDP- Value of output produced in current year prices (Price X Quantity)

Real GDP- value of output produced in constant based year prices.

                - adjusted for inflation (base year X Quantity)

                - real GDP to measure economic growth

                - measure increase in prices (inflation) use Nominal GDP

                - can increase from year to year if either price quantity increases

                - real increases only if output increases

                - earliest year ALWAYS = base year if not stated.

Nominal to Real GDP- 

(Nominal GDP / Real GDP) X 100

CPI- (most commonly used) measures cost of market basket of goods of a typical urban American family.

          - Cost of Market Basket of goods in a given year / "  " of goods in a based year.