Question

In the economy above, real GDP for year 1 is:

$512.


$393.


$480.


$691.


$460.

Answer 1

Answer: $393

Step-by-step explanation:

Real GDP is the nominal GDP after it is adjusted for inflation. When using the price index, it can be adjusted by the formula:

Real GDP = Nominal GDP for year 1 / Price index for year 1 * 100

= 550 / 140 * 100

= 392.8571

= $393