Free tool
Find the inflation rate between two price index values, convert nominal dollars to real dollars, compute the GDP deflator, or work out the real interest rate. Every result shows the formula with your numbers in it.
Built for MacroeconomicsCPI, GDP deflator or any price index. Index numbers have no dollar or percent sign.
The base year has an index of 100. The result is in base-year dollars.
Use the same units for both, for example billions of dollars.
Enter the values.
Real versus nominal is the idea that unlocks half of macroeconomics. Encodr drills the index formulas on a spaced schedule so you do not mix up which way to divide.
Get started freeInflation is the percent change in the price level, computed from two index values:
inflation = (new index - old index) / old index x 100. Do not just subtract the indexes. Going from 107 to 110 is 2.8%, not 3%.
The choice of base year does not change inflation rates.
To remove inflation from a dollar figure, divide by the index: real value = nominal value / (index / 100), in base-year dollars.
The GDP deflator is a price index with the same logic, deflator = nominal GDP / real GDP x 100. For interest,
real interest rate = nominal interest rate - inflation rate. Moving an amount between two years, as in the third option, is the real-value
formula applied twice: amount x (target index / source index).
Worked example: a price index rises from 107 to 110, so inflation is (110 - 107) / 107 x 100 = 2.80%. A nominal value of $2,000 in a year when the index is 125 is $2,000 / 1.25 = $1,600 in base-year dollars. A nominal rate of 5% with 3% inflation gives a real rate of 2%. The full walkthrough is in real vs nominal and how to adjust for inflation, and the whole course is in the free Macroeconomics deck.
Real vs nominal values explained with the formulas: compute inflation from an index, convert nominal dollars to real dollars and find the real interest rate.
What's in a Principles of Macroeconomics course: all 21 units, from GDP, unemployment and inflation to AD/AS, money, the Fed, fiscal policy and exchange rates.
How to study for macroeconomics: drill the formula sheet with worked examples, practice AD/AS shift chains, avoid the classic traps, and space your reviews.
Aggregate demand and aggregate supply explained: why each curve slopes the way it does, what shifts them, the three zones, and worked equilibrium examples.
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