If real GDP is less than nominal GDP and prices have not changed from the base-year prices, then production must have declined.

Question

Quizplus · Accepted Answer

If real GDP is less than nominal GDP and prices have not changed from the base-year prices, it indicates a calculation error or misunderstanding because, under these conditions, real GDP should equal nominal GDP. Real GDP is adjusted for inflation and reflects the value of all goods and services produced at base-year prices, so if prices haven't changed, real GDP and nominal GDP would be the same.

If Real GDP Is Less Than Nominal GDP and Prices