If the GDP price index number for a particular year is 125.00, money GDP is:
A) 25 percent larger than real GDP.
B) 25 percent smaller than real GDP.
C) 125 percent smaller than real GDP.
D) not enough information to answer the question.

Question

Quizplus · Accepted Answer

The GDP price index number indicates the level of prices relative to a base year (set at 100). A value of 125 means prices are 25% higher than in the base year, implying that nominal (or money) GDP is 25% larger than real GDP, which is adjusted for inflation.

If the GDP Price Index Number for a Particular Year