Suppose nominal GDP was $360 billion in 2010 and $450 billion in 2020.The appropriate price index was 100 in 2010 and 120 in 2020.It can be concluded that between 2010 and 2020 real GDP:
A)increased by about $15 billion.
B)decreased by about $32 billion.
C)increased by about $90 billion.
D)increased by about $117 billion.

Question

Quizplus · Accepted Answer

Real GDP in 2020 = Nominal GDP in 2020 / (Price Index in 2020 / 100) = $450 billion / 1.2 = $375 billion. Real GDP in 2010 = Nominal GDP in 2010 / (Price Index in 2010 / 100) = $360 billion / 1 = $360 billion. The increase in real GDP = $375 billion - $360 billion = $15 billion.

Suppose Nominal GDP Was $360 Billion in 2010 and $450