AP Macroeconomics : How to find real GDP gross domestic product

Study concepts, example questions & explanations for AP Macroeconomics

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Example Questions

Example Question #1 : How To Find Real Gdp Gross Domestic Product

In a certain year, nominal gross domestic product grew by 8 percent. The inflation rate was 4 percent. Real gross domestic product for this year was _______.

Possible Answers:

grew by 8 percent

grew by 4 percent

grew by 12 percent

remained constant

Correct answer:

grew by 4 percent


Nominal GDP growth refers to the rate at which real GDP increases. To find real GDP growth (i.e. GDP growth that accounts for inflation), subtract the inflation rate from the nominal GDP growth rate.

In this case, the nominal GDP growth rate is 8 percent, and the inflation rate is 4 percent. Thus, the real GDP growth rate is 4%.

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