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Sia

Question
Macroeconomics
Posted 6 months ago
The table below shows nominal GDP (in billions of dollars) and the GDP deflator for the country of Chucknorristan over several decades.
\begin{tabular}{lll} 
Year & Nominal GDP (billions) & GDP deflator \\
\hline 1970 & $20\$ 20 & 50 \\
1980 & $32\$ 32 & 80 \\
1990 & $45\$ 45 & 100 \\
2000 & $80\$ 80 & 160 \\
2010 & $120\$ 120 & 250
\end{tabular}

What was real GDP in Chucknorristan in 1980?

Choose 1 answer:
(A) $32\$ 32 billion
(B) $40\$ 40 billion
(C) $80\$ 80 billion
(D) $400\$ 400 million
(E) $2.5\$ 2.5 billion

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Answer from Sia
Posted 6 months ago
B
Key Concept
Real GDP Calculation
Explanation
Real GDP is calculated by dividing the nominal GDP by the GDP deflator (expressed as a ratio to 100) for that year. For Chucknorristan in 1980, real GDP = Nominal GDP / (GDP deflator / 100) = 32billion/(80/100)=32 billion / (80 / 100) = 32 billion / 0.8 = $40 billion.

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