Suppose the dollar value of GDP increased approximately 2 percent between October 2007 and August 2008,but real GDP fell 1 percent during the period.Which of the following best explains these data?
A)The real capacity of the economy increased more rapidly than money output during the period.
B)In the international sector,net exports fell by approximately 3 percent during the period.
C)The money supply decreased by approximately 3 percent during the period.
D)Prices increased approximately 3 percent during period.

Question

Quizplus · Accepted Answer

The increase in the dollar value of GDP despite the fall in real GDP suggests that there was an increase in prices. This is consistent with choice D, where prices are said to have increased by approximately 3 percent during the period.

Suppose the Dollar Value of GDP Increased Approximately 2 Percent