$$\begin{array} { | c | c | c | }
\hline \text { Year } & \text { Nominal GDP } & \text { Price Index } \
\hline 1 & \$ 550 & \$ 140 \
\hline 2 & 560 & 135 \
\hline 3 & 576 & 120 \
\hline 4 & 586 & 117 \
\hline 5 & 604 & 108 \
\hline
\end{array}$$ In the economy described in the table, real GDP for year 3 is
A) $512.
B) $428.
C) $480.
D) $691.

Question

$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \text { Nominal GDP } & \text { Price Index } \
\hline 1 & \$ 550 & \$ 140 \
\hline 2 & 560 & 135 \
\hline 3 & 576 & 120 \
\hline 4 & 586 & 117 \
\hline 5 & 604 & 108 \
\hline
\end{array}$$ In the economy described in the table, real GDP for year 3 is
A) $512.
B) $428.
C) $480.
D) $691.

Quizplus · Accepted Answer

Real GDP is calculated by adjusting the nominal GDP for inflation to reflect the true value of goods and services produced. For year 3, the calculation is: Real GDP = Nominal GDP / (Price Index / 100) = $576 / (120 / 100) = $480.

In the Economy Described in the Table, Real GDP for \hline

In the Economy Described in the Table, Real GDP for
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