Suppose that the nominal GDP of a country in 2017 is $10 trillion. The real GDP of the country remains constant between 2017 and 2018, but the price level increases by 20 percent. What is the nominal GDP of the country in 2018?
A) $8 trillion
B) $10 trillion
C) $12 trillion
D) $13 trillion

Question

Quizplus · Accepted Answer

Since the real GDP remains constant but the price level increases by 20 percent, the nominal GDP would increase by the same percentage to reflect the higher prices. Therefore, the nominal GDP in 2018 would be $10 trillion * 1.20 = $12 trillion.

Suppose That the Nominal GDP of a Country in 2017