Suppose nominal GDP in 1996 was $100 billion and in 1998 it was $260 billion.The general price index in 1996 was 100 and in 1998 it was 180.Between 1996 and 1998 the real GDP rose by:

Question

Quizplus · Accepted Answer

To find the real GDP growth, adjust nominal GDP for inflation using the price index. Real GDP in 1996 is $100 billion (since the index is 100). Real GDP in 1998 is $260 billion / 1.8 = $144.44 billion. The growth is ($144.44 - $100) / $100 = 44.44%, approximately 44%.

Suppose Nominal GDP in 1996 Was $100 Billion and in 1998