Suppose the real gross domestic product (GDP) equals $100 billion this year and the nominal gross domestic product (GDP) is $200 billion. This implies that the price level has increased by _____compared to the base year.

Question

Quizplus · Accepted Answer

The price level increase is calculated by comparing the nominal GDP to the real GDP. If the nominal GDP is $200 billion and the real GDP is $100 billion, it means the nominal GDP is twice the real GDP, indicating prices have doubled or increased by 100 percent compared to the base year.

Suppose the Real Gross Domestic Product (GDP) Equals $100 Billion