Say nominal GDP was $603.9 billion in 2001 and $572.3 billion in 2000,while the GDP deflator was 121.1 in 2001 and 117.7 in 2000.What was the growth rate of real GDP between 2000 and 2001?
A)5.5%
B)2.9%
C)2.6%
D)1.0%

Question

Quizplus · Accepted Answer

To find the growth rate of real GDP, first calculate real GDP for each year by dividing nominal GDP by the GDP deflator (and multiplying by 100). For 2000: ($572.3 billion / 117.7) * 100 = $486.3 billion. For 2001: ($603.9 billion / 121.1) * 100 = $498.7 billion. The growth rate is (($498.7 - $486.3) / $486.3) * 100 = 2.6%.

Say Nominal GDP Was $603