Given a GDP deflator of 120 and a Nominal GDP of 7.8 billion dollars, calculate Real GDP.(1 point)

Question

Responses

6.6 billion dollars
6.6 billion dollars

6.5 billion dollars
6.5 billion dollars

9.36 billion dollars
9.36 billion dollars

9 billion dollars

Answer 1

To calculate Real GDP from Nominal GDP and the GDP deflator, you can use the formula:

\[ \text{Real GDP} = \frac{\text{Nominal GDP}}{\text{GDP Deflator}} \times 100 \]

Given:

• Nominal GDP = 7.8 billion dollars
• GDP Deflator = 120

Let’s plug the values into the formula:

\[ \text{Real GDP} = \frac{7.8 , \text{billion}}{120} \times 100 \]

\[ \text{Real GDP} = \frac{7.8}{120} \times 100 \]

\[ \text{Real GDP} = 0.065 \times 100 \]

\[ \text{Real GDP} = 6.5 , \text{billion dollars} \]

So, the correct response is:

6.5 billion dollars