Suppose that the nominal GDP of a country is $10 trillion in 2017. Further, the Consumer Price Index (CPI) in 2017 is 125. If the base year is 2000, then real GDP of the country in 2017 in base year prices is _____ trillion.
A) $4
B) $6
C) $8
D) $10

Question

Quizplus · Accepted Answer

Real GDP is calculated by dividing the nominal GDP by the CPI (expressed as a fraction of 100) to adjust for inflation. Here, real GDP = $10 trillion / (125/100) = $8 trillion.

Suppose That the Nominal GDP of a Country Is $10