Units of Year Outputs Price ofPrice Indox Year 100 100 Unadj

Units of Year Outputs Price ofPrice Indox Year 100) 100 Unadjusted or Nominal GDP Adjusted or Real, GD Gioods (output) (Year 1-Base 2007 $ 10 $50 $50 2008 20 200 140 2009 25 10 30 2010 28 2011 14 35 2014 Price index x100 Price of same market basket in base year or Price Index- nominal GDP x100 real GDP Real GDP = Nominal GDP Price Index x100 Nominal GDPGDP for which the price levels have not been adjusted to account for inflation or deflation ..(reflects the prices that prevailed when the output was produced) Real GDPGDP that has been adjusted (inflated or deflated) for price changes

Solution

Nominal GDP (nth year) = units of output (nth year) x Price of output (nth year)

Price index = 100 x (Units of output in the base year (=5) x Price of output (nth year))/(Price of output (base year) x Units of output in the base year (=5))

(e.g. year 2009: PI = 100 x 5 x 25/(5 x 10) = 250)

Real GDP = Nominal GDP/Price index x 100

Year	Units of output	Price ($)	Price index	Nominal GDP ($)	Real GDP ($)
2007	5	10	100	50	50
2008	7	20	200	140	70
2009	8	25	250	200	80
2010	10	30	300	300	100
2011	11	28	280	308	110
2014	14	35	350	490	140