To determine the real Gross Domestic Product (GDP) for 2020, we start with the nominal GDP for 2020 and the price index for 2020. The formula we will use is:
[tex]\[ \text{Real GDP} = \frac{\text{Nominal GDP}}{\left(\frac{\text{Price Index}}{100}\right)} \][/tex]
Let's go through this step by step:
1. Nominal GDP for 2020: Given as [tex]$900 billion.
2. Price Index for 2020: Given as 140.
Substitute these values into the formula:
\[ \text{Real GDP}_{2020} = \frac{900}{\left(\frac{140}{100}\right)} \]
3. Simplify the fraction in the denominator:
\[ \frac{140}{100} = 1.4 \]
4. Now, divide the nominal GDP by this value:
\[ \text{Real GDP}_{2020} = \frac{900}{1.4} \]
5. Perform the division:
\[ \text{Real GDP}_{2020} = 642.8571428571 \]
Approximating this value to the nearest billion:
\[ \text{Real GDP}_{2020} \approx 643 \text{ billion} \]
Therefore, the real GDP for 2020 would be approximately $[/tex]643 billion.
The correct answer is:
OC. $643 billion
