Question: All questions are based on this table.
YEAR OUTPUT PRICE GDP PRICE INDEX
1 5 $35 100
2 7 $40 114.29
3 9 $45
4 10 $50
(a) Based on this table, which year is considered the Base or Reference year?
(b) Calculate (Year3) GDP price index.
(c) If Nominal GDP in year 3 is $405, what is the Real GDP for Year 3? Please, you must use the formula below to calculate your answer.
Real GDP Year 3 = Nominal GDP (Yr.3) ÷GDP price index Yr.3 (in hundredths).