Question

f the price index was 100 in 2000 and 120 in 2010, and nominal GDP was $360 billion in 2000 and $480 billion in 2010, then the value of 2010 GDP in terms of 2000 dollars would be a. $384 billion. b. $424 billion. c. $300 billion. d. $400 billion.

Answer 1

The correct option is d. $400 billion.

Step-by-step explanation:

The question is asking for the 2010 GDP in terms of 2000 dollars. We know that the price index was 100 in the year 2000 and 120 in the year 2010. We also know that the GDP in 2010, based on 2010 prices, is $480 billion.

Hence, all we need to do is convert the 2010 prices into 2000 prices, and apply the new prices on the 2010 GDP figure. This can be done using the following formula:

(100/120) x $480 billion = $400 billion

Therefore, the answer is $400 billion.

Answer 2

The correct answer is d. $400

Step-by-step explanation: