Table 6.4
$$\begin{array}{l}
\text { Table } 6.4\
\begin{array} { c c c }
\text { Year } & \text { Price Index } & \text { Nominal GDP } \
\hline 2001 & 100 & \$ 95 \text { billion } \
2002 & 105 & \$ 110 \text { billion } \
2003 & 110 & \$ 120 \text { billion } \
2004 & 120 & \$ 125 \text { billion } \
2005 & 132 & \$ 137.5 \text { billion }
\end{array}
\end{array}$$
-Refer to Table 6.4, which 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

Table 6.4
 $$\begin{array}{l}
\text { Table } 6.4\
\begin{array} { c c c } 
\text { Year } & \text { Price Index } & \text { Nominal GDP } \
\hline 2001 & 100 & \$ 95 \text { billion } \
2002 & 105 & \$ 110 \text { billion } \
2003 & 110 & \$ 120 \text { billion } \
2004 & 120 & \$ 125 \text { billion } \
2005 & 132 & \$ 137.5 \text { billion }
\end{array}
\end{array}$$
-Refer to Table 6.4, which 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.

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 the years 2002 and 2003, we get:
Real GDP in 2002 = $104.76 billion
Real GDP in 2003 = $109.09 billion
The difference between the real GDP in 2003 and 2002 is:
$109.09 billion - $104.76 billion = $4.33 billion
Therefore, the real GDP increased by slightly more than $4 billion between 2002 and 2003. The best choice is B.

Table 64 -Refer to Table 6