Suppose nominal 1920 GDP was $5,000. The GDP Deflator Decimal for 1920 using 200

Question

Suppose nominal 1920 GDP was $5,000. The GDP Deflator Decimal for 1920 using 2009 as a base year is 0.10. (Index = 10). What is the real 1920 GDP in chained, 2009 dollars? a) $50,000 b) $10,000 c) $5,000 d) $500 e) $100 Suppose nominal 1920 GDP was $5,000. The GDP Deflator Decimal for 1920 using 2009 as a base year is 0.10. (Index = 10). What is the real 1920 GDP in chained, 2009 dollars? a) $50,000 b) $10,000 c) $5,000 d) $500 e) $100 Suppose nominal 1920 GDP was $5,000. The GDP Deflator Decimal for 1920 using 2009 as a base year is 0.10. (Index = 10). What is the real 1920 GDP in chained, 2009 dollars? a) $50,000 b) $10,000 c) $5,000 d) $500 e) $100

Explanation / Answer

Correct option is (a).

Real GDP = (Nominal GDP / GDP Deflator) x 100 = ($5,000 / 10) x 100 = $50,000

[Alternatively, Real GDP = Nominal GDP / GDP Deflator decimal = $5,000 / 0.1 = $50,000]

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