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Explore TopicChoose the Best Answer
A
The real GDP in 2010 is approximately $2,000, suggesting significant growth.
B
The real GDP in 2010 is less than $1,000, indicating economic contraction.
C
The real GDP in 2010 is around $1,818, showing moderate growth adjusted for inflation.
D
The nominal GDP directly reflects actual economic growth without adjustments.
Understanding the Answer
Let's break down why this is correct
Answer
To understand the real GDP in 2010, we need to adjust the nominal GDP using the price index. The formula for real GDP is to take the nominal GDP and divide it by the price index, then multiply by 100. In this case, we have a nominal GDP of $2,200 and a price index of 110, so we calculate the real GDP as $2,200 divided by 110, multiplied by 100, which gives us about $2,000. This means that in real terms, the economy produced goods and services worth $2,000 in 2010. Since this is higher than the real GDP of $1,000 in 2006, we can infer that the economy has grown significantly from 2006 to 2010.
Detailed Explanation
To find real GDP, we adjust nominal GDP for inflation. Other options are incorrect because This answer assumes the real GDP is lower than it actually is; This option suggests the economy shrank, but real GDP is actually higher than $1,000.
Key Concepts
GDP Calculations
Inflation Adjustment
Economic Performance Indicators
Topic
GDP Calculations and Comparisons
Difficulty
hard level question
Cognitive Level
understand
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