If a Small Country Has Current Nominal GDP of $20

question 60

Multiple Choice

If a small country has current nominal GDP of $20 billion and the GDP deflator is 50, what is its real GDP?

• A)$100 billion
• B)$40 billion
• C)$10 billion
• D)$4 billion

---

Definitions:

Real Interest Rates

The interest rates adjusted for inflation, more accurately reflecting the true cost of borrowing.

Real Interest Rate

The interest rate, once revised for inflation, to represent the actual borrowing cost or the real savings yield.

Inflation Rate

The measure of how rapidly the general price point of goods and services escalates, which in turn diminishes the power to buy.

Consumer Price Index

A metric that calculates the mean fluctuation over time in the amounts urban consumers spend on a specified collection of consumer goods and services.