If nominal GDP increased 2 percent during a year, while real GDP increased 4 percent, the
A) price level must have increased approximately 2 percent compared to the prior year.
B) price level must have decreased approximately 2 percent compared to the prior year.
C) price level must have decreased approximately 50 percent compared to the prior year.
D) unemployment rate must have increased during the year.

Question

Quizplus · Accepted Answer

Nominal GDP accounts for changes in price level and real GDP is adjusted for inflation. If real GDP increased more than nominal GDP, it indicates that the price level decreased.

If Nominal GDP Increased 2 Percent During a Year, While