Question

Suppose nominal GDP in the base year was $380 billion. Five years later, nominal GDP was $480 billion and the GDP price index was 120. Over those five years, real GDP: Group of answer choices

Answer 1

Answer:

increased by $20 billion

Explanation:

Nominal GDP refer to as the current GDP of the county but real GDP refer to the current GDP after adjustment of Inflation. Now, in absence of inflation rate. Nominal GDP = Real GDP

Real GDP = $480 billion / 120 *100

Real GDP = $400 billion

So, real GDP increase by $20 billion (400 billion - 380 billion)