Use the table below to answer the following question(s).
Table 7-12

-Refer to Table 7-12.Measured in terms of 2000 prices,real GDP in 2005 was
A)600.
B)750.
C)900.
D)1,333.

Question

Use the table below to answer the following question(s).
Table 7-12
 
-Refer to Table 7-12.Measured in terms of 2000 prices,real GDP in 2005 was
A)600. 
B)750. 
C)900. 
D)1,333.

Quizplus · Accepted Answer

Looking at the table, the value for real GDP in 2005 is 3,750. The table header specifies that the values in the table are in billions of dollars, so we need to multiply 3,750 by 1,000 to get the actual GDP in billions of dollars. This gives us 3.75 trillion dollars. Measured in terms of 2000 prices, the GDP deflator for 2005 is 150 (i.e. the nominal GDP is 150% of the GDP in 2000). So, to get the real GDP in 2005 in terms of 2000 prices, we divide the nominal GDP by the GDP deflator: 3.75 trillion / 1.5 = 2.5 trillion dollars. Measured in terms of 2000 prices, real GDP in 2005 was $2.5 trillion, which is equivalent to 750 billion dollars (i.e. $2.5 trillion / 1,000 = 750 billion dollars). Therefore, the correct answer is B.

Use the Table Below to Answer the Following Question(s)