If real GDP falls from one period to another, we can conclude that
A) deﬂation occurred.
B) inﬂation occurred.
C) nominal GDP fell.
D) none of these necessarily occurred.

Question

Quizplus · Accepted Answer

Real GDP measures the output of goods and services adjusted for inflation, so a decrease in real GDP can be due to a variety of factors such as a decrease in production, decrease in consumption or investment, or an increase in imports. It does not necessarily indicate that there was deflation or inflation, or that nominal GDP fell.

If Real GDP Falls from One Period to Another, We