Question

How is nominal GDP converted into real GDP.

Answer 1

Answer:

Real GDP is calculated by taking the total output for GDP and dividing it by the GDP deflator. For example, let's say the current year's nominal GDP output was $2,000,000, while the GDP deflator showed a 1% increase in prices since the base year.

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Answer 2

Answer: dividing nominal GDP by the GDP deflator

Explanation:

lets give an example

if an economy's prices have increased by 1% since the base year, the deflating number is 1.01. If nominal GDP was $1 million, then real GDP is calculated as $1,000,000 / 1.01, or $990,099.

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