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Calculating Real GDP per Capita
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A country has a nominal GDP of $1 trillion and a GDP deflator of 125. If the population is 250 million, which of the following categories correctly classifies the real GDP per capita for this country?

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Choose the Best Answer

A

$8,000

B

$10,000

C

$12,500

D

$15,000

Understanding the Answer

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Answer

To find the real GDP per capita, we first need to calculate the real GDP. The nominal GDP is $1 trillion, and we adjust it using the GDP deflator of 125. We do this by dividing the nominal GDP by the GDP deflator (expressed as a fraction), which is 125/100 or 1. 25. So, the real GDP is $1 trillion divided by 1.

Detailed Explanation

To find real GDP, we divide the nominal GDP by the GDP deflator. Other options are incorrect because This answer might come from miscalculating real GDP; This could happen if someone mistakenly thought the GDP deflator was lower.

Key Concepts

Real GDP per Capita
Nominal GDP
GDP Deflator
Topic

Calculating Real GDP per Capita

Difficulty

medium level question

Cognitive Level

understand

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