Thank you for visiting If nominal GDP is 15 trillion and the CPI is 120 what is the real GDP A 12 trillion B 18 trillion C 12 5. 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!
Answer :
Final answer:
Option c.
The real GDP is $12.5 trillion.
Explanation:
The student has asked about the conversion of nominal GDP to real GDP using the given CPI value. To solve this, you need to understand that the CPI (Consumer Price Index) is essentially a measure of inflation and that Real GDP is the Nominal GDP adjusted for inflation. Here, we have a nominal GDP of $15 trillion and CPI is 120, which would mean the prices are 20% higher than the base year (where CPI is usually 100).
To calculate the Real GDP, we can use the formula: Real GDP = Nominal GDP / (CPI / base year CPI). In this case, the base year CPI would be 100, so the calculation would be: Real GDP = $15 trillion / (120/100) = $12.5 trillion. So, the answer is c. $12.5 trillion.
Learn more about Real GDP calculation here:
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