from $4 trillion in 1986, the base year, to $5 trillion in 1989. The GDP deflato

Question

from $4 trillion in 1986, the base year, to $5 trillion in 1989. The GDP deflator in 1989 is 120 Find real GDP in 1989: Instructions: Round your answer to three decimal places, Real GDP in 1989 rillin trillion Find the percentage increase in real GDP between 1986 and 1989: instructions: Round your answer to one decimal place. Percentage increase in real GDP between 1986 and 1989: L 42% References eBook & Resources Learning Objective: 09-05 Compare and contrast nominal GDP and real GDP and compute real GDP Worksheet Section

Explanation / Answer

GDP deflator=(Nominal GDP/Real GDP)*100

GDP deflator=120

Nominal GDP=4 Trillions

Real GDP=(Nominal GDP/GDP deflator)*100

Real GDP=(4/120)*100=3.3 trillions.

Percentage change in real GDP=(3.3-4/4)*100=-17.5%

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