Real GDP will be greater than money GDP when the GDP price index number is:
A) 0.
B) 100.0.
C) less than 100.0.
D) more than 100.0.

Question

Quizplus · Accepted Answer

Real GDP is calculated by adjusting the nominal (or money) GDP for inflation or deflation to reflect the true value of goods and services produced. The GDP price index number is a measure of the level of prices compared to a base year. A base year has an index of 100. If the index number is less than 100, it indicates deflation since the base year. In this case, the nominal GDP would be adjusted upwards to reflect the higher purchasing power of money, resulting in a real GDP that is greater than the nominal (or money) GDP.

Real GDP Will Be Greater Than Money GDP When the GDP