Suppose nominal GDP was $360 billion in 2002 and $450 billion in 2012.The appropriate price index was 100 in 2002 and 120 in 2012.It can be concluded that between 2002 and 2012 real GDP:
A) increased by about $15 billion.
B) decreased by about $32 billion.
C) increased by about $90 billion.
D) increased by about $117 billion.

Question

Quizplus · Accepted Answer

To find the real GDP in 2012, adjust the nominal GDP for inflation using the price index: Real GDP = Nominal GDP / (Price Index / 100). For 2012, Real GDP = $450 billion / (120/100) = $375 billion. For 2002, Real GDP = $360 billion / (100/100) = $360 billion. The increase in real GDP is $375 billion - $360 billion = $15 billion.

Suppose Nominal GDP Was $360 Billion in 2002 and $450