Thank you for visiting If the nominal GDP is 20 trillion what is the real GDP if the current CPI is 104 a 19 23 trillion b 20 77. 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:
The real GDP is calculated by dividing the nominal GDP by the CPI converted to a decimal. Using the formula Real GDP = $20 trillion / 1.04 gives us a real GDP of $19.23 trillion. The correct option is a.
Explanation:
If the nominal GDP is $20 trillion and the current CPI is 104, we can calculate the real GDP by adjusting the nominal GDP for inflation. The Consumer Price Index (CPI) acts similarly to the implicit price deflator in this context. To find the real GDP, we use a slightly modified version of the given formula which now includes CPI:
Real GDP = Nominal GDP / (CPI/100)
First, we convert the CPI to a decimal by dividing it by 100, which gives us 1.04. Then, we divide the nominal GDP by this number:
Real GDP = $20 trillion / 1.04
Real GDP = $19.23 trillion
Therefore, the real GDP is $19.23 trillion, which corresponds to option a. The correct option is a.
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