Question

Calculate Real GDP for the following situations:

A. In 2001 nominal GDP was $9,875 billion dollars and the GDP chain price index was 108.6.
B. In 2002, nominal GDP was $10,114 billion dollars and the GDP chain price index was 113,6
C. By how much had real GDP risen or fallen from 2001 to 2002?

Answer 1

The Real GDP for 2001 was approximately $9,089.32 billion and for 2002 was approximately $8,900.35 billion. The Real GDP decreased by approximately $188.97 billion from 2001 to 2002.

Step-by-step explanation:

To calculate the Real GDP using the GDP chain price index, we use the formula: Real GDP = Nominal GDP / (Price Index / 100).

Calculating Real GDP for 2001

A. Nominal GDP in 2001: $9,875 billion
GDP chain price index: 108.6

Real GDP = $9,875 billion / (108.6 / 100) = $9,875 billion / 1.086 = approximately $9,089.32 billion

Calculating Real GDP for 2002

B. Nominal GDP in 2002: $10,114 billion
GDP chain price index: 113.6

Real GDP = $10,114 billion / (113.6 / 100) = $10,114 billion / 1.136 = approximately $8,900.35 billion

Change in Real GDP from 2001 to 2002

C. The change in Real GDP from 2001 to 2002 = Real GDP in 2002 - Real GDP in 2001 = $8,900.35 billion - $9,089.32 billion = - $188.97 billion

The Real GDP decreased by approximately $188.97 billion from 2001 to 2002.