Which of the following represents how real GDP is calculated?
A) nominal GDP multiplied by the GDP deflator
B) nominal GDP divided by the population
C) nominal GDP divided by the PPI, the producer price index
D) nominal GDP divided by the GDP deflator

Question

Quizplus · Accepted Answer

Real GDP is calculated by adjusting the nominal GDP for changes in the overall price level, which is done using the GDP deflator. Therefore, option D, which states that nominal GDP is divided by the GDP deflator, is the correct representation of how real GDP is calculated. Options A, B, and C are incorrect as they do not involve using the GDP deflator to adjust for changes in the price level.

Which of the Following Represents How Real GDP Is Calculated