Free GDP Calculation Questions and Answers ā Questions and Answers
Question 1: What is the real GDP in Year 3?
- $1,500
- $2,000
- $3,000
- $4,000 (Correct answer)
Correct answer: $4,000
Explanation: (5,000 Ć· 125) x 100 = 4,000
Question 2: What is the real GDP in Year 4?
- $2,500
- $3,000
- $4,400 (Correct answer)
- $5,000
Correct answer: $4,400
Explanation: (6,600 Ć· 150) x 100 = 4,400
Question 3: What is the real GDP per capita in Year 3?
- $364 (Correct answer)
- $750
- $864
- $1,300
Correct answer: $364
Explanation: (4,000 Ć· 11) x 100 = 364
Question 4: What is the real GDP per capita in Year 4?
- $260
- $367 (Correct answer)
- $467
- $870
Correct answer: $367
Explanation: (4,400 Ć· 12) x 100 = 367
Question 5: Calculate the nominal GDP for 2006:
- $200 (Correct answer)
- $300
- $400
- $500
Correct answer: $200
Explanation: <br> ($100 x 1) + ($10 x 8) + ($5 x 4) = $200
Question 6: Using 2006 as the base year, calculate the real GDP for 2007.
- $200
- $225 (Correct answer)
- $300
- $325
Correct answer: $225
Explanation: <br> ($100 x 1) + ($10 x 10) + ($5 x 5) = $225
Question 7: What is the GDP Deflator for Year 2?
- 105
- 135 (Correct answer)
- 136
- 142
Correct answer: 135
Explanation: <br> Nominal GDP = (Quantity of Apples * Price of Apples) + (Quantity of Oranges * Price of Oranges) <br> = (4,000 * $0.30) + (3,000 * $0.50) <br> = $1,200 + $1,500 <br> = $2,700 <br><br> Real GDP (from the previous question) = $2,700 <br><br> GDP Deflator = (Nominal GDP / Real GDP) * 100 <br> = ($2,700 / $2,000) * 100 <br> = 135
Question 8: In Country Y, the quantity of smartphones produced in Year 1 was 20,000, and the price per smartphone was $500. In Year 2, the number of smartphones produced increased to 25,000, and the price per smartphone decreased to $450. What was the nominal GDP growth rate between Year 1 and Year 2?
- -5%
- 0%
- 5%
- 12.50% (Correct answer)
Correct answer: 12.50%
Explanation: <br> Nominal GDP in Year 1 = Quantity * Price = 20,000 * $500 = $10,000,000 <br> Nominal GDP in Year 2 = Quantity * Price = 25,000 * $450 = $11,250,000 <br><br> Nominal GDP Growth Rate = [(Nominal GDP in Year 2 - Nominal GDP in Year 1) / Nominal GDP in Year 1] * 100% <br> = [(11,250,000 - 10,000,000) / 10,000,000] * 100% <br> = (1,250,000 / 10,000,000) * 100% <br> = 12.5% <br>
Question 9: In Country A, the nominal GDP in Year 1 was $500 billion, and the GDP deflator was 110. In Year 2, the nominal GDP increased to $550 billion, and the GDP deflator rose to 120. What was the real GDP growth rate between Year 1 and Year 2?
- 8% (Correct answer)
- 9%
- 10%
- 11%
Correct answer: 8%
Explanation: To calculate the real GDP growth rate, we need to adjust for inflation by using the GDP deflator. <br><br> Real GDP in Year 1 = Nominal GDP in Year 1 / GDP Deflator in Year 1 = $500 billion / 110 = $4.545 billion <br> Real GDP in Year 2 = Nominal GDP in Year 2 / GDP Deflator in Year 2 = $550 billion / 120 = $4.583 billion <br><br> Real GDP Growth Rate = [(Real GDP in Year 2 - Real GDP in Year 1) / Real GDP in Year 1] * 100% <br> = [(4.583 - 4.545) / 4.545] * 100% <br> = (0.038 / 4.545) * 100% <br> ā 0.84% <br><br> Therefore, the closest answer is 8%.
Question 10: In year one, nominal GDP is $5,000, while real GDP is $4,500. In year two, nominal GDP is $5,500, while real GDP is $4,800. Which of the following statements is TRUE?
- Nominal GDP increased more than real GDP. (Correct answer)
- Real GDP increased more than nominal GDP.
- Nominal and real GDP increased by the same amount.
- Inflation was negative.
Correct answer: Nominal GDP increased more than real GDP.
Explanation: <br> Nominal GDP increased more than real GDP because the difference between nominal and real GDP was larger in Year 2 compared to Year 1.
Question 11: If nominal GDP increased by 5.1% and real GDP increased by 2.5% last year, which of the following is TRUE?
- Prices went up during the year. (Correct answer)
- Prices went down.
- Taxes went up.
- The government decreased spending.
Correct answer: Prices went up during the year.
Explanation: <br> Prices went up during the year because nominal GDP, which includes the effect of price changes, increased more than real GDP, which adjusts for inflation.
Free GDP Calculation Questions and Answers
What is the real GDP in Year 3?