The country of PirateLand had a GDP of 1,000 doubloons in 2013 and 1,500 doubloons in 2014.The GDP price index was 100 in 2013 and 150 in 2014.What happened to real GDP in PirateLand between 2013 and 2014?

Question

Quizplus · Accepted Answer

Real GDP is adjusted for inflation and reflects the value of all goods and services produced at constant prices. To find the real GDP for 2014, we adjust the nominal GDP (1,500 doubloons) by the change in the price index from 2013 to 2014. The formula to calculate real GDP for 2014 is: (Nominal GDP 2014 / GDP Price Index 2014) * GDP Price Index base year (2013). This gives us (1,500 / 150) * 100 = 1,000 doubloons, which is the same as the real GDP in 2013, indicating that real GDP remained the same between 2013 and 2014.

The Country of PirateLand Had a GDP of 1,000 Doubloons