Suppose 2010 is the base year. From 2010 to 2018, the price index increases from 100 to 102.5. If nominal Gross Domestic Product (GDP) is $2,800 in 2018, then the real Gross Domestic Product (GDP) in 2018 is
A) $2,700.
B) $2,800.
C) $2,732.
D) $2,870.

Question

Quizplus · Accepted Answer

To calculate real GDP, we need to divide nominal GDP by the price index and then multiply it by 100. 
Real GDP in 2018 = (Nominal GDP in 2018/Price index in 2018) × 100
= ($2,800/102.5) × 100
= $2,732. Therefore, the answer is C.

Suppose 2010 Is the Base Year