A nation's real GDP will increase by increasing the following, except
A) number of workers.
B) labor productivity.
C) technological progress.
D) average price level.

Question

Quizplus · Accepted Answer

Increasing the average price level (inflation) will not increase real GDP as it only affects the nominal GDP which is the monetary value of goods and services produced. Real GDP adjusts for inflation and measures the production of goods and services in constant (inflation-adjusted) dollars. Increasing the number of workers, labor productivity, and technological progress all lead to increases in output and production, which would increase real GDP.

A Nation's Real GDP Will Increase by Increasing the Following