Question

Let's say that for 1998 real gdp was $4000 billion. then, in 1999, nominal gdp was $5445 billion, while the general price level increased 10 percent in 1999. given this information, the percentage change in real gdp from 1998 to 1999 is:

Answer 1

The real GDP of 1998 = 4000

Nominal GDP of 1999 = 5445

real GDP = Nominal GDP / ( 100% + increase%) = 5445 / (100%+10%) = 4950

Increase in real GDP = 4950 - 4000 = 950

Percentage change = 950 / 4000 * 100 = 23.75 %