If inflation is 2% and nominal GDP grew by 4% then during the same period real GDP changes by how much?

Question

Social Studies

Franco Orozco

26 February, 00:28

If inflation is 2% and nominal GDP grew by 4% then during the same period real GDP changes by how much?

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Answers (2)

Know the Answer?

Hunter Herring · Answer 1

Answer:B. 2%

Kassidy Gray · Answer 2

The answer is 2%.

In order to find the real GDP figure, the Fisher equation needs to be applied as follows:

r = i - π

where,

r is the real interest rate i stands for the norminal interest rate π stands for the inflation rate

Therefore:

r = i - π = 4% - 2% = 2%