Suppose that this year’s nominal GDP is $16 trillion. To account for the effects of inflation, we construct a price-level index in which an index value of 100 represents the price level five years ago. Using that index, we find that this year’s real GDP is $15 trillion.  Given those numbers, we can conclude that the current value of the index is: .

Suppose that nominal GDP in an economy in year 1 is $500 million and in year 2 is $600 million. If the price level of the goods and services produced has increased from an index number of 120 to an index number of 130 then, Group of answer choiceswhile nominal GDP increased between year 1 and year 2, real GDP must have decreased.while nominal GDP has decreased between year 1 and year 2, real GDP must have increased.while prices of the goods and services have increased by 10% between year 1 and year 2, real GDP has decreased by only 5%.while there has been inflation over this period, real GDP has still increased.

Suppose the GDP deflator was 110 in 2017 and 115 in 2018. If nominal GDP is $100 billion in 2001 and $110 billion in 2002, then the growth rate of real GDP in 2018 is equal toCorrect!  5.2%   -4.3%   5.5%   -0.6%

Nominal GDP is:  A. GDP adjusted for inflation  B. GDP measured in current prices  C. GDP adjusted for population size  D. GDP measured in constant dollars

The formula for calculating a price index is ______.Multiple choice question.real GDP divided by nominal GDPthe price of a market basket in a specific year divided by the price of the same market basket in the base year multiplied by 100the price of the market basket in the base year divided by the price of the same market basket in a specific year multiplied by 100real GDP multiplied by nominal GDP

Suppose that James’s income in Year 1 was $40,000. Over the next four years his income increases by 7% per year. At the same time, the economy experiences an inflation rate of 5% per year.  a. Complete the table below. Do not round your intermediate calculations. Enter your final responses as a whole number for Nominal income and Real income. Enter your final responses for the price index rounded to one decimal place. Year Nominal income Price index Real income1 $40,000 100 $ 2 3 4 5 b. At the end of Year 5, James’s real income will be $ .