According to the hypothetical economy in Figure 5.1,between 1960 and 1970 real GDP declined but nominal GDP continued to rise.The increase in nominal GDP was due to

Question

Quizplus · Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods and services produced by their respective prices. In the given scenario, real GDP decreased while nominal GDP increased, indicating that there was a greater increase in the price level than the decrease in output. Therefore, the nominal dollar value of output produced increased, resulting in an increase in nominal GDP.

According to the Hypothetical Economy in Figure 5