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Table: Per Capita GDP

-(Table: Per Capita GDP) Look at the table Per Capita GDP. If 2011 is the base year, real GDP in 2014 was:
A)$400.
B)$3,000.
C)$4,000.
D)$80,000.

Question

Use the following to answer questions :
Table: Per Capita GDP
 
-(Table: Per Capita GDP) Look at the table Per Capita GDP. If 2011 is the base year, real GDP in 2014 was:
A)$400. 
B)$3,000. 
C)$4,000. 
D)$80,000.

Quizplus · Accepted Answer

To calculate real GDP in a year, we need to use the price index of the base year to adjust the nominal GDP of that year. Using the formula Real GDP = Nominal GDP / Price Index (in hundredths), we can find the real GDP for each year. Using the table given, we can calculate the price index for each year, using the formula Price Index = (Nominal GDP / Real GDP) x 100. If we take 2011 as the base year (price index = 100), we can find the price index for 2014, which is 125. So, the real GDP in 2014 would be: Real GDP = Nominal GDP / Price Index = $500 / 1.25 = $4000. Therefore, the correct answer is C.

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