2.4: Adjusting Nominal Values to Real Values
- Page ID
- 175519
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)Converting Nominal to Real GDP
Year | Nominal GDP (billions of dollars) | GDP Deflator (2005 = 100) |
1960 | 543.3 | 19.0 |
1965 | 743.7 | 20.3 |
1970 | 1,075.9 | 24.8 |
1975 | 1,688.9 | 34.1 |
1980 | 2,862.5 | 48.3 |
1985 | 4,346.7 | 62.3 |
1990 | 5,979.6 | 72.7 |
1995 | 7,664.0 | 81.7 |
2000 | 10,289.7 | 89.0 |
2005 | 13,095.4 | 100.0 |
2010 | 14,958.3 | 110.0 |
![The graph shows that nominal GDP has risen substantially since 1960 to a high of $14,527 in 2010](https://socialsci.libretexts.org/@api/deki/files/69/CNX_Econ_C19_009.jpg?revision=1&size=bestfit&width=390&height=300)
![The graph shows that the U.S. GDP deflator has risen substantially since 1960.](https://socialsci.libretexts.org/@api/deki/files/70/CNX_Econ_C19_010.jpg?revision=1&size=bestfit&width=390&height=300)
Year | Nominal GDP (billions of dollars) | GDP Deflator (2005 = 100) | Calculations | Real GDP (billions of 2005 dollars) |
1960 | 543.3 | 19.0 | 543.3 / (19.0/100) | 2859.5 |
1965 | 743.7 | 20.3 | 743.7 / (20.3/100) | 3663.5 |
1970 | 1075.9 | 24.8 | 1,075.9 / (24.8/100) | 4338.3 |
1975 | 1688.9 | 34.1 | 1,688.9 / (34.1/100) | 4952.8 |
1980 | 2862.5 | 48.3 | 2,862.5 / (48.3/100) | 5926.5 |
1985 | 4346.7 | 62.3 | 4,346.7 / (62.3/100) | 6977.0 |
1990 | 5979.6 | 72.7 | 5,979.6 / (72.7/100) | 8225.0 |
1995 | 7664.0 | 82.0 | 7,664 / (82.0/100) | 9346.3 |
2000 | 10289.7 | 89.0 | 10,289.7 / (89.0/100) | 11561.5 |
2005 | 13095.4 | 100.0 | 13,095.4 / (100.0/100) | 13095.4 |
2010 | 14958.3 | 110.0 | 14,958.3 / (110.0/100) | 13598.5 |
![The graph shows the relationship between real GDP and nominal GDP. After 2005, nominal GDP appears lower than real GDP because dollars are now worth less than they were in 2005.](https://socialsci.libretexts.org/@api/deki/files/71/CNX_Econ_C19_013.jpg?revision=1&size=bestfit&width=585&height=350)
Key Concepts and Summary
Glossary
- nominal value
- the economic statistic actually announced at that time, not adjusted for inflation; contrast with real value
- real value
- an economic statistic after it has been adjusted for inflation; contrast with nominal value