If a country is experiencing inflation, it would mean that:
A) nominal GDP and real GDP are growing at the same rate.
B) nominal GDP is growing faster than real GDP.
C) real GDP is growing faster than nominal GDP.
D) nominal GDP is growing and real GDP is falling.

Question

Quizplus · Accepted Answer

Inflation is defined as a sustained increase in the general price level of goods and services in an economy over time. This means that the prices of goods and services are increasing, which leads to a higher nominal GDP. However, if real GDP is not growing at the same pace, then the increase in nominal GDP is not reflective of an increase in actual economic output. Therefore, if a country is experiencing inflation, it would mean that nominal GDP is growing faster than real GDP.

If a Country Is Experiencing Inflation, It Would Mean That