If the price index is rising over a period of time, then the real GDP in years
A)prior to the base year will be larger than the nominal GDP.
B)prior to the base year will be less than the nominal GDP.
C)after the base year will be higher than the nominal GDP.
D)after the base year will be rising faster than the nominal GDP.

Question

Quizplus · Accepted Answer

The real GDP in years prior to the base year will be less than the nominal GDP if the price index is rising over a period of time. This is because the price index is a measure of the overall price level of goods and services in an economy, and if it is rising, then the prices of goods and services are increasing. As a result, the real GDP, which is the value of all goods and services produced in an economy adjusted for inflation, will be lower than the nominal GDP, which is the value of all goods and services produced in an economy without adjusting for inflation.

If the Price Index Is Rising Over a Period of Time