The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _____ between 2001 and 2002.

Question

Quizplus · Accepted Answer

To calculate real GDP, we need to divide the nominal GDP by the price index and then multiply by 100. Real GDP in 2001 is calculated as $10,000 billion divided by 100 and multiplied by 100, which equals $10,000 billion. Real GDP in 2002 is calculated as $10,800 billion divided by 105 and multiplied by 100, which equals $10,285.71 billion. Therefore, real GDP increased by $285.71 billion, which is slightly less than $10 billion.

The Table Below Shows the Price Indexes and the Nominal