In order to calculate the real GDP for 2001 we can use the GDP deflator formula, because deflator and nominal GDP for 2001 are given.
GDPreal2001=GDPnominal2001*100GDP deflator2001=10128*100102.4≈9890.6
The real GDP for 2002 can be calculated using GDP growth rate:
GDP growth ratet=GDPt-GDPt-1GDPt-1*100%
1.6%= GDPreal2002-9890.69890.6*100 → GDPreal2002≈10048.8
The formula for calculating the growth rate of GDP used in (a) is applicable here:
GDP growth rate=GDPt-GDPt-1GDPt-1*100%
GDPnominal2002 growth= 10469.6-1012810128*100%≈3.4%
GDPnominal2004 growth= 11734.3-10971.210971.2*100%≈3.4%
GDPreal2001 growth= 9890.6-98179817*100%≈0.7%
GDPreal2003 growth= 10320.6-10048.810048.8*100%≈2.7%
Nominal GDP for a specific year measures the value of produced goods during that year and in that year’s prices. In contrast, real GDP measures the value of the output using base year prices, which ...