The dollar value of GDP increased approximately 4 percent during the year, but real GDP fell 2 percent. Which of the following best explains this data?
A) The real capacity of the economy increased more rapidly than money output.
B) In the international sector, there was a balance of trade deficit of approximately 2 percent of GDP.
C) The inflation rate was approximately 6 percent during the year.
D) The general level of prices rose approximately 2 percent.

Question

Quizplus · Accepted Answer

The nominal GDP increased by 4%, while real GDP fell by 2%, indicating that the inflation rate was approximately 6%, as nominal GDP includes inflation.

The Dollar Value of GDP Increased Approximately 4 Percent During