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 2002 and 2003.

Question

Quizplus · Accepted Answer

To calculate the real GDP, we need to use the formula: Real GDP = Nominal GDP/Price Index * 100. Using this formula for 2002 and 2003, we get:

Real GDP in 2002 = $8,400 billion / 110 * 100 = $7,636.36 billion
Real GDP in 2003 = $9,000 billion / 115 * 100 = $7,826.09 billion

So the real GDP increased by $189.73 billion ($7,826.09 billion - $7,636.36 billion), which is slightly more than $4 billion. Therefore, the correct answer is B.

The Table Below Shows the Price Indexes and the Nominal