The clearest sign of economic growth is a(n)
A)increase in nominal GDP.
B)increase in real GDP.
C)decrease in nominal GDP.
D)increase in nominal GDP

Question

Quizplus · Accepted Answer

Real GDP is adjusted for inflation and is a better indicator of economic growth than nominal GDP, which includes the effects of inflation. Therefore, an increase in real GDP is the clearest sign of economic growth. Choice A is incorrect because an increase in nominal GDP may simply reflect inflation and not actual economic growth. Choice C is incorrect because a decrease in GDP is a sign of economic contraction, not growth. Choice D is also incorrect because it does not specify whether the increase is real or nominal.

The Clearest Sign of Economic Growth Is A(n)