In year one,the GDP deflator is 100 and in year two 110.If nominal GDP in year two is $300 billion,what is real GDP for year two?
A)$200 billion.
B)$100 billion.
C)$272.73 billion.
D)$220 billion.

Question

Quizplus · Accepted Answer

The GDP deflator is used to convert nominal GDP into real GDP. The formula is: Real GDP = Nominal GDP / (GDP Deflator / 100). For year two, Real GDP = $300 billion / (110 / 100) = $300 billion / 1.1 = $272.73 billion.

In Year One,the GDP Deflator Is 100 and in Year