Answer the question based on the following data, using year 1 as the base year. All dollars are in billions. Refer to the above data. Real GDP in year 4 was approximately:
A) $3,989 billion
B) $3,562 billion
C) $3,774 billion
D) $3,494 billion

Question

Answer the question based on the following data, using year 1 as the base year. All dollars are in billions.  Refer to the above data. Real GDP in year 4 was approximately:
A) $3,989 billion 
B) $3,562 billion 
C) $3,774 billion 
D) $3,494 billion

Quizplus · Accepted Answer

Real GDP in year 4 can be calculated using the formula Real GDP = (Nominal GDP / Price Index) x 100. Using year 1 as the base year, the price index in year 1 is 100 and in year 4 it is 125. Thus, Real GDP in year 4 = (4,450 / 1.25) x 100 = $3,560 billion (rounded to nearest billion). Therefore, the best choice is B.

Answer the Question Based on the Following Data, Using Year