# This box deals with the difference between nominal and real

This box deals with the difference between nominal and real GDP, as well, as the characteristics of thecomponents of GDP over time.‐ Go to BEA.gov and get Tables 1.1.5 (nominal GDP) and 1.1.6 (real GDP) and download them for theperiod 1960 to the latest available year in annual frequency.‐ What is the base year in table 1.1.6?‐ Plot line 1 of both tables on a single graph. Where do they cross? What is the relationship between realand nominal GDP before and after the crossing point? Why?‐ Take the natural log of real GDP (line 1) and plot the change in GDP from one year to the next measuredby ln(GDP(t)) ‐ ln(GDP(t‐1)). (If you multiply by 100, it will be in percentage.) Is there something in thepicture that catches your eye? (Hint: look at the volatility of the series.)‐ Calculate the GDP shares of Consumption (line 2), Investment (line 7), Government (line 22), and NetExports (line 15). For example, the consumption share is C/Y or line 2 / line 1. What can you say aboutthese shares?