Question

A country has a nominal Gross Domestic Product (GDP) of $240 billion. If the GDP deflator is 80, what would be the real GDP of the country? Use this formula to calculate the real GDP:
The real GDP of the country is ____ billion.a. 300 billionb. 192 billionc. 350 billion

Answer 1

Sarah, this is the solution to the problem:

We already know that:

Real GDP = Nominal GDP/GDP Deflator * 100

Substituting with the values we know:

• Real GDP = 240/80 * 100

,

• Real GDP = 3 * 100

,

• Real GDP = 300 billion

Sarah, the correct answer is A.