ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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10 trillion minus 1.4 billion
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10 trillion divided by 1.4 billion
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10 trillion plus 1.4 billion
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10 trillion multiplied by 1.4 billion
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Detailed explanation-1: -In general, calculating real GDP is done by dividing nominal GDP by the GDP deflator (R). For example, if an economy’s prices have increased by 1% since the base year, the deflating number is 1.01. If nominal GDP was $1 million, then real GDP is calculated as $1, 000, 000 / 1.01, or $990, 099.
Detailed explanation-2: -Economists calculate real GDP by then adjusting the resulting nominal GDP to account for inflation by applying a GDP deflator or a price index, which measures inflation since the base year. In this case, the base year is a year separate from the one under study, but whose prices will be used to measure it.
Detailed explanation-3: -Real GDP is an inflation-adjusted calculation that analyses the rate of all commodities and services manufactured in a country for a fixed year. It is expressed in foundation year prices and referred to as a fixed cost price. It is also known as inflation-corrected GDP or constant price GDP.
Detailed explanation-4: -a price index used to adjust nominal GDP to find real GDP; the GDP deflator measures the average prices of all finished goods and services produced within a nation’s borders over time.