Calculating Real Economic Growth (1 Viewer)

[rachelalyce01]

Hey,

I was just doing some past papers and I cant figure out how to calculate "Real Economic Growth" when you are given the GDP and CPI.

I looked at the "Notes" part of the paper, but their forumla kinda confused me, like I still wasnt sure how to do it. Any ideas?

For Example:

In the 2003 Paper -

Year 1 - Money Gross Domestic Product (GDP) was 380 ($m) and CPI was 100.
Year 2 - Money GDP was 416 and CPI was 104.

The answer is 400 million but cant figure out how to get it?

Can someone help me please?


P.S. Good Luck for Tomorrow!!!!

 

[seano77]

Real GDP = Nominal GDP *100/CPI

So for year 2 in your example Real GDP = 416 * 100/104

=400m.