Practicing Success
Which of the following is the correct formula for real GDP? |
Real GDP=Price index/Nominal GDP Real GDP=Nominal GDP/GDP deflator Real GDP=GDP deflator/Nominal GDP Real GDP=price index/100 |
Real GDP=Nominal GDP/GDP deflator |
The correct answer is Option 2: Real GDP=Nominal GDP/GDP deflator Real gross domestic product (GDP) is a measurement of economic output that accounts for the effects of inflation or deflation. It provides a more realistic assessment of growth than nominal GDP. Without real GDP, it could seem like a country is producing more when it's only that prices have gone up. |