In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:
A)of changes in our trade deficits and surpluses.
B)the length of the workweek has declined historically.
C)the price level may change over time.
D)depreciation may be greater or smaller than gross investment.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current market prices, whereas real GDP is adjusted for changes in the price level over time. Therefore, if there is a change in the price level over the years being compared, there will be a difference between nominal and real GDP. This is because nominal GDP will reflect the increase in prices, whereas real GDP will be adjusted for this change, allowing for a more accurate comparison of economic growth over time. Changes in trade deficits, workweek length, and depreciation versus gross investment may impact specific components of GDP, but they would not necessarily lead to a difference between nominal and real GDP.

In Comparing GDP Data Over a Period of Years a Difference