If nominal GDP, prices, and population all increase but real GDP remains the same then
A)real GDP per capita will decrease
B)real GDP per capita will increase
C)we cannot tell what will happen to real GDP per capita
D)the standard of living will increase
E)the standard of living will remain the same

Question

Quizplus · Accepted Answer

Nominal GDP measures the total output of an economy using current market prices. Therefore, if nominal GDP increases, it could be due to an increase in prices, output, or both. If real GDP remains the same, it means that the increase in nominal GDP is solely due to an increase in prices. If population also increases, then there are more people sharing the same amount of output, leading to a decrease in real GDP per capita. Therefore, choice A is the best answer.

If Nominal GDP, Prices, and Population All Increase but Real