$$\begin{array} { c c c }
\hline \text { Year } & \text { Consumer price index } & \text { Nominal GDP } \
\hline 2001 & 100 & \$ 95 \text { billion } \
2002 & 105 & \$ 110 \text { billion } \
2003 & 110 & \$ 120 \text { billion } \
2004 & 120 & \$ 125 \text { billion } \
2005 & 132 & \$ 137.5 \text { billion } \
\hline
\end{array}$$
-Refer to the table in the exhibit.Between 2001 and 2002, what happened to real GDP for this nation?

Question

$$\begin{array} { c c c } 
\hline \text { Year } & \text { Consumer price index } & \text { Nominal GDP } \
\hline 2001 & 100 & \$ 95 \text { billion } \
2002 & 105 & \$ 110 \text { billion } \
2003 & 110 & \$ 120 \text { billion } \
2004 & 120 & \$ 125 \text { billion } \
2005 & 132 & \$ 137.5 \text { billion } \
\hline
\end{array}$$
-Refer to the table in the exhibit.Between 2001 and 2002, what happened to real GDP for this nation?

Quizplus · Accepted Answer

To calculate the change in real GDP between 2001 and 2002, we first adjust the nominal GDP of 2002 to 2001 prices using the Consumer Price Index (CPI). The formula for real GDP in 2002's dollars is: Nominal GDP 2002 / (CPI 2002 / CPI 2001) * 100. Plugging in the numbers: $110 billion / (105 / 100) = $104.76 billion. Comparing this to the 2001 nominal GDP (which is also the real GDP for 2001 since the CPI base year is 2001), $95 billion, we see an increase of about $9.76 billion, which is slightly less than $10 billion.

-Refer to the Table in the Exhibit