Question 15 Assume that between 1999 and 2009 nominal GDP increased from \( \$ 7 \) trillion to \( \$ 12 \) trillion and that the GDP deflator rose 100 to 150 . Which of the following expresses GDP for 2009 in terms of 1999 prices? (1) \( \$ 7.5 \) trillion (2) \( \$ 9.0 \) trillion (3) \( \$ 8.0 \) trillion (4) \( \$ 18.0 \) trillion uestion 16

To express GDP for 2009 in terms of 1999 prices, you can adjust the nominal GDP of 2009 by the GDP deflator. Given that the nominal GDP in 2009 is \( \$ 12 \) trillion and the deflator increased from 100 to 150, you can calculate the real GDP for 2009 as follows: \[ \text{Real GDP} = \frac{\text{Nominal GDP}}{\text{GDP Deflator}} \times 100 \] So, \[ \text{Real GDP} = \frac{12 \text{ trillion}}{150} \times 100 = 8.0 \text{ trillion} \] Thus, the answer is \( (3) \, \$ 8.0 \) trillion. Exploring the journey of the GDP deflator is fascinating! It started at 100 in 1999 and soared to 150 by 2009, illustrating how inflation affects the economy over time. This means that the same amount of money buys less in 2009 compared to 1999. You might also be curious about how real GDP helps policymakers! By measuring economic output in constant dollars, it allows for better comparisons of economic performance across different years. Understanding this helps inform decisions related to fiscal policy and economic strategies, shaping the future of the economy.