Real GDP for a particular year would be less than money GDP in that year if:
A) the GDP price index number was less than 100.0 in that year.
B) the GDP price index number was greater than 100.0 in that year.
C) money GDP in that year was less than money GDP in the previous year.
D) money GDP in that year was greater than money GDP in the previous year.

Question

Quizplus · Accepted Answer

Real GDP is calculated by adjusting the money GDP for inflation or deflation, using a GDP price index as the deflator. If the GDP price index number is greater than 100, it indicates that the prices have increased compared to the base year, implying inflation. Therefore, when adjusting money GDP for inflation, real GDP would be less than money GDP because the value of goods and services would be lower in real terms due to the higher price levels.

Real GDP for a Particular Year Would Be Less Than