Chapter 13, Problem 22AA

To determine

To calculate: The value of real GDP.

Explanation of Solution

Given information:

2000 Nominal GDP is $10.223 trillion

2000 price deflator is 107.7

Calculation of Real GDP:

The given formula to calculate real GDP is,

  $\begin{array}{l}\text{Real GDP=}\frac{\text{Nominal GDP}}{\text{Implicit GDP }\text{}\text{Price Deflator}}\text{×100}\\ \end{array}$

Substituting the values in the above formula,

  $\begin{array}{c}\text{Real GDP=}\frac{\text{\$10}\text{.223trillion}}{\text{107}\text{.7}}\text{×100}\\ \text{=\$9}\text{.49trillion}\end{array}$

Hence, the value of real GDP is $9.49 trillion.

Economics Concept Introduction

Introduction:

Nominal GDP- The value of products and services produced in the economy before making any adjustment for inflation is nominal GDP.

Real GDP- The value of nominal GDP from which adjustment of inflation is made, is termed as real GDP. This shows the real changes in output.