Edit View Mistory Bookmarks People Window Help xQExam 2 Chapter6 FlashcCenage 29

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Edit View Mistory Bookmarks People Window Help xQExam 2 Chapter6 FlashcCenage 29c3b2f-5645 4068-8832-3ase3d42d8b8actemptid e5b4a882-0165- R Econ Macros ASSIGNMENTS STUDYBOARD Yaksh 24/25 The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005. The real GDP _between 2002 and 2003 Table &3 Nominal GDP 5110 billion 5320 billion S125 bition 1375 biion remained constant decreased by $6 billion increased by only about $1 increased by slightly more than $4 bilion MacBook Ai 8 2

Explanation / Answer

Calculate the real GDP in 2002 -

Real GDP in 2002 = Nominal GDP in 2002 * (100/Price index in 2002)

Real GDP in 2002 = $110 billion * (100/105)

Real GDP in 2002 = $104.76 billion

The real GDP in 2002 was $104.76 billion.

Calculate the real GDP in 2003 -

Real GDP in 2003 = Nominal GDP in 2003 * (100/Price index in 2003)

Real GDP in 2003 = $120 billion * (100/110)

Real GDP in 2003 = $109.09 billion

The real GDP in 2003 was $109.09 billion.

Increase in real GDP = $109.09 billion - $104.76 billion = $4.33 billion

Thus,

The real GDP increased by slightly more than $4 billion between 2002 and 2003.

Hence, the correct answer is the option (5) [increased by slightly more than $4 billion].

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