If the base year was last year, which of the following statements has to be FALSE for next year?
A)real GDP will be greater than nominal GDP if prices are falling
B)real GDP will be greater than nominal GDP if prices are rising
C)real GDP cannot increase if prices are falling
D)real GDP cannot decrease if prices are rising
E)nominal GDP cannot decrease if prices are rising

Question

Quizplus · Accepted Answer

Real GDP adjusts for inflation and represents the quantity of goods and services produced, whereas nominal GDP does not adjust for inflation. If prices are rising (inflation), nominal GDP might increase due to higher prices, not necessarily because more goods and services are produced. Therefore, real GDP could be less than or equal to nominal GDP in this scenario, not necessarily greater.

If the Base Year Was Last Year, Which of the Following