Nominal gross domestic product (GDP)increases if

Question

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Nominal GDP increases when either current prices or current quantities increase. This is because nominal GDP is calculated by multiplying the current prices by the current quantities of goods and services produced in an economy. Therefore, if either current prices or current quantities increase, there will be an increase in nominal GDP. Option A is not correct because a decrease in current quantities will cause a decrease in nominal GDP, even if current prices increase. Option B is not correct because a decrease in current prices will cause a decrease in nominal GDP, even if current quantities increase. Option D is not the best choice because while real GDP is an important economic indicator, it is not directly related to nominal GDP. Option E is incorrect as a decrease in real GDP would mean that both prices and quantities have decreased.

Nominal Gross Domestic Product (GDP)increases If