A researcher finds that,for an economy,the nominal GDP in the year 2015 equaled the nominal GDP in the year 2016.She also finds that the output of the economy was the same over the two years.A situation like this is possible only if ________.

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current market prices, and thus includes the effects of inflation. If nominal GDP is the same for two years, it means that the increase in prices (inflation) over the two years has been offset by an increase in output. Therefore, the annual inflation rate in the economy is 0 percent. The annual interest rate does not directly affect nominal GDP.

A Researcher Finds That,for an Economy,the Nominal GDP in the Year