Consider the GDP deflator and real GDP, given in thousands of dollars, for the country of Economica.

The base year, or base period, is year 3. For the given years, calculate the nominal GDP. Round your answers to the nearest dollar.

What is the nominal GDP for year 1?
What is the nominal GDP for year 2?
What is the nominal GDP for year 3?

Answer:

Year 1: $32,316

Year 2: $49,924

Year 3: $10,998

Explanation:

1. Nominal GDP in year 1 = (gdp deflator * real GDP)/100
    = (105 * $30,777)/100
    = 1.05 * $30,777
    = $32,315.85 ~ $32,316

2. Nominal GDP in year 2 = (gdp deflator * real GDP)/100
    = (123 * $40,589)/100
    = 1.23 * $40,589
    = $49,924.47 ~ $49,924

3.Nominal GDP in year 3 = (gdp deflator * real GDP)/100
    = (100 * $10,998)/100
    = $10,998

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