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If the price level is 100 for 1996 and the price level is 103.3 in 1998, a nominal GDP in 1998 of $8,800 billion would mean that real GDP in 1998 (in 1996 prices) would be closest to:_______ a. $9.090.
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If the price level is 100 for 1996 and the price level is 103.3 in 1998, a nominal GDP in 1998 of $8,800 billion would mean that real GDP in 1998 (in 1996 prices) would be closest to:_______

a. $9.090.4 billion.
b. $8,518.9 billion.
c. $8,800 billion.
d. $8696.7 billion

User Benoit Pasquier
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1 Answer

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Answer: b. $8,518.9 billion.

Step-by-step explanation:

Nominal GDP is calculated with current prices which means that the effects of inflation are present.

Real GDP removes this effect by basing the GDP calculation on the prices of a previous period:

Real GDP = Nominal GDP * 100/ Price level

= 8,800 * 100/ 103.3

= $8,518.877

= $8,518.9 billion

User Shahyad Sharghi
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5.1k points
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