This is an important chapter.  Focus on the Expenditures Approach and the Incomes Approach and Nominal vs Real GDP (concentrate on the fixed weights approach only).  

While 21 is an important chapter, the material on computing real GDP is difficult.

By clicking on the next links you will go to problems involving computation of GDP, determination of real GDP, and calculations of two different price indeces.

Case and Fair talk about an old method (fixed weight) of computing price level changes for GDP and of computing real GDP versus a new method.  The new method is intended to minimize bias and arbitrariness.   Unfortunately, it is very hard to understand what is being done and why.

Let's consider the old way, which is a bit easier.  We know that GDP (or "nominal" GDP) involves, for each good, a quantity produced times a current price per unit. The summation for the several (or several million) items yields GDP.   Real GDP attempts to strip away the effect of  price increases, allowing a comparison of different years' GDPs as if there were no price changes.   The old method of determining real GDP was to, in effect, reprice the earlier year GDP in terms of the prices of now, to facilitate comparison to the GDP of now.  So it would be early year quantity times later year price, compared to later year quantity times later year price.

Assigned problems:  below        Additional readings: below

  Special Problem -- GDP, Price Index
 Additional Problem -- GDP, Price Index, for anyone interested
 Added Problem -- Calculating GDP