If Nominal GDP is 5.2% and Inflation is 3.2%, Real GDP is

A-8.4%

B-3.2%

C - 5.2%

D-2.0%

The correct answer is D. 2.0%

Explanation:

Real GDP measures the production of goods and services destined for final demand at constant prices; that is, it eliminates the distortion of variations in prices, that could be as inflation or as deflation, taking the prices of the year that is taken as the basis.

On the other hand, Nominal GDP refers to the market value or prices of the production of goods and services in a specific period of time (usually one year). Nominal GDP indicates the rise and fall of prices, their inflation or deflation. For its part, Real GDP reflects the value of that production but at constant prices.

Formula:

Real GDP rate = Nominal GDP rate - Inflation

Real GDP rate = 5.2 - 3.2

Real GDP rate = 2.0