Suppose that,since the base year,all prices have risen by 100%.This year's current-dollar GDP is $2,000 billion.Then constant-dollar GDP is

Question

Quizplus · Accepted Answer

If all prices have risen by 100% since the base year, it means that the price level has doubled. To find the constant-dollar GDP (which reflects the volume of production at the base year prices), you divide the current-dollar GDP by the inflation factor. Here, the inflation factor is 2 (100% increase), so $2,000 billion / 2 = $1,000 billion.

Suppose That,since the Base Year,all Prices Have Risen by 100