Assume that between 1999 and 2009 nominal GDP increased from $7 trillion to $12 trillion and that the GDP deflator rose from 100 to 150. Which of the following expresses GDP for 2009 in terms of 1999 prices?
A) $7.5 trillion
B) $8.0 trillion
C) $9.0 trillion
D) $18.0 trillion

Question

Quizplus · Accepted Answer

To calculate real GDP in 2009 using 1999 prices, we need to divide nominal GDP in 2009 by the GDP deflator in 2009 and then multiply it by the GDP deflator in 1999:
Real GDP in 2009 = (Nominal GDP in 2009/GDP deflator in 2009) x GDP deflator in 1999
= ($12 trillion/150) x 100
= $8 trillion.

Assume That Between 1999 and 2009 Nominal GDP Increased from $7