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 and2001?

Question

Quizplus · Accepted Answer

The growth rate of real GDP is calculated by adjusting nominal GDP for inflation using the GDP deflator. Real GDP for 2000 is $572.3 billion / 1.177 = $486.3 billion, and for 2001 is $603.9 billion / 1.211 = $498.7 billion. The growth rate is (($498.7 - $486.3) / $486.3) * 100% = 2.6%.

Say Nominal GDP Was $603