In terms of constant $2000, real GDP is $250.

00 in 2000 and $245 in

2001. The $245 value for real GDP in 2001 reflects −2% real GDP
growth between 2000 and 2001, i.e. $245 = $250 ∗ (1.0 − 0.02).
If we were to compute real GDP in apple equivalents at year-
2000 relative prices, we would compute real GDP to be 12.50 apple
equivalents in the year 2000 and 12.25 apple equivalents in the year
2001:
Year 2000: 12.50 = 5 + 10 ∗
_
$15.00
$20.00
_
Year 2001: 12.25 = 4 + 11 ∗
_
$15.00
$20.00
_
.
Growth in real GDP when measured in apple equivalents is
12.25/12.50 − 1.0 = −0.02(−2.0%), which is identical to growth in
real GDP between 2000 and 2001 when GDP is measured in constant
$2000. This example demonstrates that the growth rates of real GDP
do not depend on whether the level of real GDP is measured in apple
equivalents or in constant $2000.
There are a few more facts about real GDP of which you should be
aware:
• In our examples,we updated the expenditure shares every yearwhen
calculating growth in real GDP. In other words, to compute real
GDP growth from 2000 to 2001, we used year-2000 expenditure
shares, and to compute real GDP growth from 2001 to 2002, we
used year-2001 expenditure shares. If we had worked with quarterly
examples, we would have updated expenditure shares every quarter.
The period-by-period updating of expenditure shares is consistent
with current practice at the government agency that constructs the
GDP data, the Bureau of Economic Analysis (BEA). 4
4 Before1996, the BEA held expenditure shares fixed at some base year, and the base
year was updated every five years. This method led to large revisions in estimated