Asked by Emily Yannatone on May 26, 2024
Verified
If the nominal gross domestic product (GDP) for the year 2000 was $6.2 trillion and the price index was 200,the real gross domestic product (GDP) for 2000 was _____.
A) $3.1 trillion
B) $6.2 trillion
C) $12.4 trillion
D) $18.6 trillion
E) $24.3 trillion
Price Index
A statistical measure that shows changes in the average price level of a selected basket of goods and services over time.
Real Gross Domestic Product
The total value of all goods and services produced within a country in a specific period, adjusted for inflation, indicating the actual growth of an economy.
- Comprehend the principles of nominal and real GDP along with the importance of base years within price indices.
Verified Answer
JN
Johnson NzowaMay 31, 2024
Final Answer :
A
Explanation :
Real GDP is calculated by dividing nominal GDP by the price index (in base year prices). Therefore, real GDP for 2000 would be:
Real GDP = Nominal GDP / Price Index
Real GDP = $6.2 trillion / 200
Real GDP = $31 billion
Note: It's important to pay attention to the units of measurement. The question provides the nominal GDP in trillions, but the answer choices are in billions. Therefore, the answer should be $3.1 trillion, not $31 billion.
Real GDP = Nominal GDP / Price Index
Real GDP = $6.2 trillion / 200
Real GDP = $31 billion
Note: It's important to pay attention to the units of measurement. The question provides the nominal GDP in trillions, but the answer choices are in billions. Therefore, the answer should be $3.1 trillion, not $31 billion.
Learning Objectives
- Comprehend the principles of nominal and real GDP along with the importance of base years within price indices.