Suppose that in 2005 Real GDP was $40 billion and the GDP price index was 1.20....

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Suppose that in 2005 Real GDP was $40 billion and the GDP price index was 1.20. If nominal GDP increased by 40% between 2005

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Answer 1

Answer #1

Answer- Correct option is 'd'

Given, Real GDP = 40

Price Index = 1.20

Real GDP = Nominal GDP / Price Index

40 = Nominal GDP / 1.20

Nominal GDP in 2005 = 40 * 1.20

= 48

Nominal GDP in 2005 is $ 48 billion.

If nominal GDP increased by 40 % between 2005 and 2006.

Nominal GDP in 2006 = Nominal GDP in 2005 + 40 %

= 48 + 40 %

= 67.2

Nominal GDP in 2006 is $ 67.2 billion.

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Answer 2

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Suppose that in 2005 Real GDP was $40 billion and the GDP price index was 1.20....

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Suppose that in 2005 Real GDP was $40 billion and the GDP price index was 1.20....

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Suppose that in 2005 Real GDP was $40 billion and the GDP price index was 1.20....