Following is data for a hypothetical economy.The base year is 2002 (Price index = 100).

-Refer to the above data.Real GDP in 2006 was approximately:
A) $3,433 billion.
B) $3,743 billion.
C) $4,023 billion.
D) $4,031 billion.

Question

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100).
 
-Refer to the above data.Real GDP in 2006 was approximately:
A) $3,433 billion. 
B) $3,743 billion. 
C) $4,023 billion. 
D) $4,031 billion.

Quizplus · Accepted Answer

To calculate Real GDP, we need to use the formula: Nominal GDP / Price index in hundredths x 100. 
Real GDP in 2006 = (Nominal GDP for 2006 / Price index for 2006) x 100 
= ($4,139 billion / 108.3) x 100 
= $3,819.87 billion (rounded to the nearest billion) 
Therefore, the closest option is D, which is $4,031 billion.

Following Is Data for a Hypothetical Economy