Question

Suppose that, during 2012, nominal GDP was $10,082 billion. During 2012, the value of the Consumer Price Index was 177.1 (using 1999 as the base year). Estimate the real GDP for 2012.

Answer 1

Answer: Real GDP for 2012 is $5,692.83 billion

Explanation: Real GDP is a measure of the output of goods and services in an economy taking into consideration prices changes (inflation and deflation). Real GDP is calculated usinf prices of a base year not current prices.

Real GDP = Nominal GDP/CPI × 100

= $10,082 billion/ 177.1 × 100

= $5,692.83 billion

Answer 2

5,692.83 3.

Step-by-step explanation:

($10,082 billion/177.1) x 100 = 5,692.83

Remember the real GDP takes into account the value of the total number of goods and services produced by a country in a given year, while taking the effect of inflation into account.

Because of inflation the consumer price index data is used in the calculation to find the change or deflation that has occurred.