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If nominal Gross Domestic Product (GDP) in 2010 was [tex]$500 billion with a price index of 100, what would be the real Gross Domestic Product (GDP) in 2020 if the 2018 nominal Gross Domestic Product (GDP) was $[/tex]900 billion and the 2020 price index was 140?

A. [tex]$540 billion
B. $[/tex]800 billion
C. [tex]$643 billion
D. $[/tex]900 billion

Sagot :

GinnyAnsweridn
To determine the real Gross Domestic Product (GDP) for 2020, we start with the nominal GDP for 2020 and the price index for 2020. The formula we will use is:

[tex]\[ \text{Real GDP} = \frac{\text{Nominal GDP}}{\left(\frac{\text{Price Index}}{100}\right)} \][/tex]

Let's go through this step by step:

1. Nominal GDP for 2020: Given as [tex]$900 billion. 2. Price Index for 2020: Given as 140. Substitute these values into the formula: \[ \text{Real GDP}_{2020} = \frac{900}{\left(\frac{140}{100}\right)} \] 3. Simplify the fraction in the denominator: \[ \frac{140}{100} = 1.4 \] 4. Now, divide the nominal GDP by this value: \[ \text{Real GDP}_{2020} = \frac{900}{1.4} \] 5. Perform the division: \[ \text{Real GDP}_{2020} = 642.8571428571 \] Approximating this value to the nearest billion: \[ \text{Real GDP}_{2020} \approx 643 \text{ billion} \] Therefore, the real GDP for 2020 would be approximately $[/tex]643 billion.

The correct answer is:
OC. $643 billion
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