If both the real GDP and nominal GDP increase by 10 percent, then we can conclude that the price level _____ and the output:
A) remains unchanged; decreases.
B) remains unchanged; increases.
C) increases; remains unchanged.
D) decreases; remains unchanged.

Question

Quizplus · Accepted Answer

When both real GDP and nominal GDP increase by the same percentage, it indicates that the output (real GDP) has increased, but the price level has remained unchanged because the increase in nominal GDP is solely due to the increase in output, not prices.

If Both the Real GDP and Nominal GDP Increase by 10