Macro 2008 Form B FRQ #3- Real and Nominal GDP

The video tutorial explains the basics of GDP and inflation using a 2008 macro exam question. It covers the calculation of nominal GDP by multiplying the quantity and price of goods, and explains the inflation rate using the GDP deflator. The tutorial also demonstrates how to find real GDP by adjusting nominal GDP for inflation. It discusses the impact of a nominal wage increase on real wages and the effects of unexpected inflation on borrowers with fixed-rate loans. The video concludes with a breakdown of the points awarded for each part of the question.

What is the formula for calculating nominal GDP?

How does an index number of 150 relate to inflation since the base year?

Explain why $3,000 is not the correct real GDP when nominal GDP is $6,000 and inflation is 50%.

What happens to real wages when nominal wages increase by 20% but prices increase by 50%?

Discuss the impact of unexpected inflation on borrowers with fixed-rate loans.