If nominal GDP falls, we can say that:

Question

Quizplus · Accepted Answer

Nominal GDP is calculated by multiplying the quantity of goods and services produced with their current market prices. If nominal GDP falls, it means either production has fallen, or prices have fallen, or both have fallen. Therefore, option C is the correct answer. Option A is not possible because if production has risen, nominal GDP should have increased. Option B is also not possible because if prices have risen, nominal GDP should have increased. Option D is not possible because if production has fallen and prices have risen, nominal GDP may or may not have changed depending on the magnitude of the changes.

If Nominal GDP Falls, We Can Say That