Nominal GDP in 2024 is $1,200 and in 2025 is $1,500. Real GDP in 2024 is $1,200 and in 2025 is $1,350.

Question

BlackTom AI · Accepted Answer

We start by identifying the growth calculations needed: two separate growth rates are asked for, one using nominal GDP figures and one using real GDP figures.

First blank (nominal GDP growth): Nominal GDP grows from 1,200 to 1,500. To find the growth rate, subtract the old value from the new value and divide by the old value:
(1,500 − 1,200) / 1,200 = 300 / 1,200 = 0.25.
Converting to a percentage, 0.25 equals 25%. Therefore, the first blank should be 25%.

Second blank (real GDP growth): Real GDP grows from 1,200 to 1,350. Apply the same growth-rate formula using real values:
(1,350 − 1,200) / 1,200 = 150 / 1,200 = 0.125.
Converting to a percentage, 0.125 equals 12.5%. Therefore, the second blank should be 12.5%.

If you’re double-checking, remember:
- Nominal GDP growth captures both price and quantity changes, hence it’s the growth measured with current prices.
- Real GDP growth strips out price changes (using constant prices) and reflects changes in quantity/output.

Now, with the provided numbers, the two growth rates align as 25% for nominal GDP and 12.5% for real GDP.

ECON_002_001_25F Problem Set 2

Nominal GDP in 2024 is $1,200 and in 2025 is $1,500. Real GDP in 2024 is $1,200 and in 2025 is $1,350.

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