# If nominal GDP was reported at $137.9 billion and real GDP was reported at$134.5 billion, what...

## Question:

If nominal GDP was reported at $137.9 billion and real GDP was reported at$134.5 billion, what was the inflation rate for the period?

## Gross Domestic Product:

A gross domestic product is the market value of all goods and services produced by the entire nation strictly made within the nation's geographical boundaries during one period.

We will compute for the GDP deflator which is defined as the change of price inflation accounted for in the nominal and real GDP.

In this case:

• Nominal GDP is the total market value of all goods the entire nation has produced.
• Real GDP is a nominal GDP adjusted for inflation on the covered period.

Nominal GDP < Real GDP = inflation

Nominal GDP = Real GDP = no inflation or deflation

Nominal GDP > Real GDP = deflation

{eq}GDP~Deflator~=~\displaystyle \frac{Nominal~GDP}{Real~GDP}~*~100 {/eq}

{eq}GDP~Deflator~=~\displaystyle \frac{137.9}{134.5}~*~100 {/eq}

The GDP deflator or inflation rate for the period is 102.52.