Question

Using the year 2000 as the base year, compute

- nominal GDP [1 point]
- real GDP [1 point]
- GDP de
ator [1 point]

Answer 1

1) Nominal GDP = Current year price* Current year quantity

= 500*3000 + 400,000*20

= 1,500,000 + 8,000,000

= $9,500,000

2) Real GDP = Base year price* Current year quantity

= 500*2000 + 400,000*10

=1,000,000 + 4,000,000

= $5,000,000

3) GDP Deflator = Nominal GDP/Real GDP

=9,500,000/5,000,000