Question

Question 1 (1 point)

	Year	Nominal GDP	Deflator	Real GDP
	1980	$12		$24
	1990	18	75
	2000		80	22.5
base	2010	20		20

GDP in trillions of dollars. Fill in the blanks using only integers. Do not use any dollar signs, labels, units, decimals, or points.

Blank 1:

Blank 2:

Blank 3:

Blank 4:

Question 2 (1 point)

The overall trend of nominal GDP appears to be increasing. After converting to real GDP, to 2010 dollars, what is the trend?

a	Real GDP is declining.
b	Real GDP is fluctuating and cannot be determined.
c	Real GDP continues to increase.
d	Real GDP is constant.

Answer 1

Question 1

GDP Deflator = Nominal GDP / Real GDP

Year 1980,

GDP Deflator = Nominal GDP / Real GDP

GDP Deflator = 12 / 24 = $0.5

Year 1990,

GDP Deflator = Nominal GDP / Real GDP

Real GDP = Nominal GDP / GDP Deflator

= 18 / 75 = $0.24

Year 2000

Nominal GDP = GDP Deflator * Real GDP

= 80 * 22.5

= 1800

Year 2010

GDP Deflator = Nominal GDP / Real GDP

= 20/20 =$1

Blank 1: 0.5

Blank 2: 0.24

Blank 3: 1800

Blank 4: 1

Question 2:

Since 2010 is the base year, Real GDP is always equal to Nominal GDP and the GDP deflator is always 100.

Real GDP will, therefore, follow the same trend as the trend of Nominal GDP which is increasing.

So, option c. is correct