The table below shows the price indexes and the nominal gross domestic product (GDP)for an economy from 2001 to 2005.The real GDP _____ between 2002 and 2003.
Table 6.3

A)decreased by slightly more than $5 billion
B)increased by slightly more than $4 billion
C)remained constant
D)increased by only about $1 billion
E)decreased by $6 billion

Question

The table below shows the price indexes and the nominal gross domestic product (GDP)for an economy from 2001 to 2005.The real GDP _____ between 2002 and 2003.​ ​
Table 6.3
​

A)decreased by slightly more than $5 billion 
B)increased by slightly more than $4 billion​ 
C)remained constant​ 
D)increased by only about $1 billion​ 
E)decreased by $6 billion​

Quizplus · Accepted Answer

Real GDP is calculated by dividing the nominal GDP by the price index and multiplying by 100. Comparing the price index for 2002 and 2003, we can see there was a decrease from 115 to 110. Therefore, the real GDP in 2003 would be higher than in 2002, indicating an increase. Looking at the options, the only one that fits is option B, which states that real GDP increased by slightly more than $4 billion between 2002 and 2003.

The Table Below Shows the Price Indexes and the Nominal