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22 December, 04:02

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)
  1. 22 December, 05:12
    0
    Answer:B. 2%
  2. 22 December, 05:16
    0
    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%
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