Growth rate of nominal GDP - I don\'t understand how to come up with this answer

Question

Growth rate of nominal GDP - I don't understand how to come up with this answer. (answer is given)

P Do Homework - Cynthia Davis - Google Chrome https://www. mathxl.com/Student/PlayerHomework.aspx?homeworkId=3491 96782&questionid-1;&flushed-false;&cld-3666944;&review-; Cynthia Davis 4/14/16 8:25 AM Review Homework: Homework 9 Chapter 11 Close Score: 1 of 1 pt 80120 HW Score: 100%, 20 of 20 pts :-Question Help * Concept Question 11.2.2 If nominal GDP increases, what might be the cause of this increase? If nominal GDP increases, this could be caused by: (Select all that apply.) A. An increase in real GDP YB. An increase in the price level C. A decrease in the price level D. Deflation Given the following information, what is the growth rate of nominal GDP? Yo real GDP $1400 (in millions) YI real GDP = $1450 (in millions) Yo price level = 120 Y1 price level 130 The growth rate of nominal GDP is 11.9 %. (Round your answer to the nearest hundredth.) Question is complete

Explanation / Answer

Nominal GDP = Real GDP x (Price level / 100)

So,

Nominal GDP, Y0 ($ million) = 1400 x (120 / 100) = 1680

Nominal GDP, Y1 ($ million) = 1450 x (130 / 100) = 1885

Growth in nominal GDP = ($1885 million / $1680 million) - 1 = 1.1220 - 1 = 0.1220, or 12.20%

Given answer is incorrect.

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