If nominal GDP in 1987 was $500 billion with a price index of 100,what would be the real GDP in 1995 if the 1995 nominal GDP was $900 billion and the 1995 price index was 140?
A)$900 billion
B)$540 billion
C)$800 billion
D)$643 billion

Question

Quizplus · Accepted Answer

To calculate real GDP in 1995, we need to adjust the nominal GDP using the price index. We use the following formula to do so: real GDP = (nominal GDP / price index) * 100.

Using this formula, we can calculate the real GDP in 1987 as (500/100) * 100 = $500 billion.

To calculate the real GDP in 1995, we use the formula as (900/140) * 100 = $643 billion. Therefore, the correct answer is D) $643 billion.

If Nominal GDP in 1987 Was $500 Billion with a Price