If a country is experiencing inflation, the change in the nominal national product will
A)overstate the change in the real value of production.
B)overstate the inflation rate.
C)be falling faster than the rate of inflation.
D)equal the change in the real national product.
E)understate the value of national income.

Question

Quizplus · Accepted Answer

Inflation means that prices are rising, so the nominal national product (which measures production in current prices) will include the increase in prices and thus overstate the change in the real value of production (which adjusts for inflation).

If a Country Is Experiencing Inflation, the Change in the Nominal