Question

If in a specified year nominal gross domestic product grew by 11 percent and real gross domestic product grew by 4 percent, inflation for this year would be

Answer 1

6.73%

Step-by-step explanation:

(1 + nominal GDP) = (1 + Inflation) X (1 + real GDP)

(1.11) = (1 + Inflation) x 1.04

(1 + Inflation) = 1.11/1.04

(1 + Inflation) = 1.0673

inflation = 0.0673

inflation = 6.73%