Suppose that from 2008 to 2013, nominal GDP increased from $7,000 billion to $9,000 billion. However, the GDP deflator increased from 100 to 115 over this period. We can conclude that real GDP increased over this period.

Question

Quizplus · Accepted Answer

The increase in nominal GDP from $7,000 billion to $9,000 billion, even after accounting for the increase in the GDP deflator from 100 to 115, indicates that the real GDP (which is adjusted for inflation) also increased. This is because the nominal GDP growth outpaces the inflation rate implied by the GDP deflator.

Suppose That from 2008 to 2013, Nominal GDP Increased from $7,000