High School

Thank you for visiting If GDP rises from 4 trillion in 1986 base year to 5 trillion in 1989 and the GDP deflator in 1989 is 120 what is. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!

If GDP rises from $4 trillion in 1986 (base year) to $5 trillion in 1989, and the GDP deflator in 1989 is 120, what is the real GDP in 1989?

A) $4 trillion
B) $4.17 trillion
C) $5 trillion
D) $6 trillion

Answer :

Final answer:

The real GDP in 1989 is calculated using the GDP deflator to adjust for inflation. With a nominal GDP of $5 trillion and a GDP deflator of 120, the real GDP comes to $4.17 trillion. The correct answer is b) $4.17 trillion.

Explanation:

To calculate the real GDP in 1989, we need to use the GDP deflator, which is a measure of inflation. First, we divide the GDP deflator for 1989 (120) by 100 to get 1.2. Then, we divide the nominal GDP for 1989 ($5 trillion) by the GDP deflator (1.2) to obtain the real GDP:

Real GDP = Nominal GDP / GDP deflator = $5 trillion / 1.2 = $4.17 trillion

The real GDP in 1989 can be calculated by adjusting the nominal GDP for the change in prices since the base year using the GDP deflator.

Real GDP = Nominal GDP / (GDP Deflator / 100)

Using the provided information, plug in the numbers:

Real GDP = $5 trillion / (120 / 100)

Real GDP = $5 trillion / 1.2

Real GDP = $4.17 trillion

Thank you for reading the article If GDP rises from 4 trillion in 1986 base year to 5 trillion in 1989 and the GDP deflator in 1989 is 120 what is. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!

Rewritten by : Jeany

Other Questions