Question 1 1 pts Suppose that nominal GDP increased in Econland from $10 Billion to $12...

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Question

Answer 1

Answer #1

Question 1

Nominal GDP has increased in Econland from $10 billion to $12 billion.

Calculate the percentage change in nominal GDP -

% change = [($12 billion - $10 billion)/$10 billion] * 100 = 20%

The nominal GDP growth is 20%.

Inflation rate = 5%

Calculate the real GDP growth -

Real GDP growth = Nominal GDP growth - Inflation rate

Real GDP growth = 20% - 5% = 15%

Thus,

The real GDP grew by 15%.

Hence, the correct answer is the option (a) [It grew by 15%].

Answer 2

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