Suppose in a Given Year, GDP Was $7,242 Billion and the GDP

question 86

Multiple Choice

Suppose in a given year, GDP was $7,242 billion and the GDP chain price index for that year is 117.5. Real GDP is:

• A) $5,488 billion.
• B) $6,163 billion.
• C) $6,740 billion.
• D) $7,789 billion.

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Definitions:

Inventories

The stock of goods or materials that a company holds for the ultimate goal of resale or production.

Investment

The purchase of new plants, new equipment, new buildings, and new residences, plus net additions to inventories.

Nominal GDP

The total market value of all goods and services produced in a country in a given period, measured using current prices without adjusting for inflation.

Current-Year Prices

Prices of goods and services measured during the same year they are produced, not adjusted for inflation; also referred to as "nominal prices."