Economists use gross domestic product to measure the wealth of nations.
Gross domestic product (GDP) is a measure of the total value of the final goods and services produced within a nation's borders during a certain time period. A rise in gross domestic product indicates economic growth. However, due to inflation, the rise in the prices of goods and services over time, the gross domestic product that a country reports may not accurately reflect the final market value of the goods and services it has produced. Many economists use the following formula to compute real gross domestic product.
Real gross domestic product = (nominal gross domestic product) / [(price index)/100].
(See References 1)
Instructions
1. Use the CIA World Factbook to locate the nominal gross domestic product of the country whose real gross domestic product you would like to compute. Assign the variable 'N' to this value and 'Q' to the unknown real gross domestic product. (See References 1)
For example, the nominal gross domestic product of Iceland in 2008 was $13.15 billion.
N = 13,150,000,000
Q = ?
2. Find your country's gross domestic product price index, also called its gross domestic product deflator, using the search function of the International Monetary Fund's website and assign this value the variable 'P.' (See References 1)
The gross domestic product price index for Iceland in 2008 was 145.338.
P = 145.338
3. Divide 'P' by 100. (See References 1)
[P/100]
145.338 / 100 = 1.45338
4. Divide 'N' by the quotient, or division product, of 'P' and 100 to find 'Q.' (See References 1)
(N) / (P/100) = Q.
13,150,000,000 / 1.45338 = Q
Q = $9,047,874,609
This means that the real gross domestic product of Iceland in 2008 was just below $9.3 billion.
