How to find real GDP gross domestic product

AP Macroeconomics · Learn by Concept

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AP Macroeconomics › How to find real GDP gross domestic product

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1

In a certain year, nominal gross domestic product grew by 8 percent. The inflation rate was 4 percent. Real gross domestic product for this year was _______.

grew by 4 percent

CORRECT

grew by 8 percent

0

grew by 12 percent

0

remained constant

0

Explanation

Nominal GDP growth refers to the rate at which real GDP increases. To find real GDP growth (i.e. GDP growth that accounts for inflation), subtract the inflation rate from the nominal GDP growth rate.

In this case, the nominal GDP growth rate is 8 percent, and the inflation rate is 4 percent. Thus, the real GDP growth rate is 4%.

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