If real GDP rises while nominal GDP falls, then prices on average have:
A) risen.
B) fallen.
C) stayed the same.
D) decreased and then been offset by an equal increase.

Question

Quizplus · Accepted Answer

If real GDP rises while nominal GDP falls, it means that the increase in output is due to an increase in productivity, which results in a decline in prices. So, on average, prices have fallen.

If Real GDP Rises While Nominal GDP Falls, Then Prices