The GDP price mdex in the United States in 2007 was about 106, and real GDP in 2

Question

The GDP price mdex in the United States in 2007 was about 106, and real GDP in 2007 was $13 0 trillion (2005 dollars). The GDP price index in the United States in 2010 was about 108, and real GDP in 2010 was $13.1 trillion (2005 dollars). Calculate nominal GDP in 2007 and in 2010 and the percentage increase in nominal GDP between 2007 and 2010. >>> Answer below to 1 decimal place. Nominal GDP in 2007 is $ trillion. Nominal GDP in 2010 is $ trillion. The percentage increase in the nominal GDP between 2007 and 2010 is percent.

Explanation / Answer

GDP Price Index in 2007 = 106

Real GDP in 2007 = $13 Trillion

Real GDP in 2005 would mean the market value of goods and services purchased in the year 2007 valued at the market price of 2005. So that means that GDP is $13 Trillion as per 100 price index. T

Thus at current price index of 106, Nominal GDP in year 2007 = 1.06*$13 trillion = $13.78 Trillion

Same way Nominal GDP in year 2010 = $13.1 * 1.08 = $14.148 Trillion

Percentage Increase in nominal GDP between 2007 and 2010 = 2.61%

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