please help!!?

Question

Hi, Do you know how to calculate real GDP when price index is given?? please help me out here is the data:- (Note: we have to take out the real GDP in 2005 constant prices)

2004 -- Nominal GDP 10,000 Price Index 90
2005 -- Nominal GDP 10,500 Price Index 100
2006 -- Nominal GDP 12,000 Price Index 115

Answer 1

NGDP/PI = RGDP

The price index is 1 + inflation rate from base year
2004 - Real GDP = 10,000/0.90 = 11,111 in 2005 dollars
2005 - Real GDP = 10,500/1.00 = 10,500 in 2005 dollars
2006 - Real GDP = 12,000/1.15 = 10,434 in 2005 dollars

This economy has been shrinking in real terms and experiencing severe inflation.

Answer 2

real GDP X price index=nominal GDP
so
nominal GDP / price index= real GDP