If nominal GDP increased from $5,000 billion in 2010 to $5,500 billion in 2011 and the GDP deflator increased from 130 to 140 over the same time period, what would the 2011 real GDP equal expressed in terms of 2010 dollars?
A)$4,643 billion
B)$5,107 billion
C)$5,385 billion
D)$5,500 billion

Question

If nominal GDP increased from $5,000 billion in 2010 to $5,500 billion in 2011 and the GDP deflator increased from 130 to 140 over the same time period, what would the 2011 real GDP equal expressed in terms of 2010 dollars?
A)​$4,643 billion
B)​$5,107 billion
C)​$5,385 billion
D)​$5,500 billion

Quizplus · Accepted Answer

Real GDP is calculated by dividing nominal GDP by the GDP deflator (in decimal form) and then multiplying by 100. For 2011, it is ($5,500 billion / 140) * 100 = $5,107 billion.

If Nominal GDP Increased from $5,000 Billion in 2010 to $5,500