10
QuizMultiple Choice

GDP and Changes in the Price Level

Question 10 • VT-GA-EOC-Personal Finance & Economics A ULHS

Which of the following is the correct way to calculate real GDP?

Answer
A
Divide constant GDP by the implicit GDP price deflator and then multiply by 100.
B
Divide current GDP by the implicit GDP price deflator and then multiply by 100.
C
Multiply current GDP by the implicit GDP price deflator.
D
Multiply constant GDP by the implicit GDP price deflator.

Explanation

The implicit GDP price deflator is an index with a base value of 100. To calculate real GDP, divide current (nominal) GDP by the deflator and multiply by 100. Therefore, the correct method is “Divide current GDP by the implicit GDP price deflator and then multiply by 100.”

AI-written and checked against the verified answer.

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