In periods of generally rising prices,
A)real GDP will grow faster than nominal GDP.
B)nominal GDP will grow slower than real GDP.
C)real GDP will grow slower than nominal GDP.
D)real GDP and nominal GDP will grow at the same rate.

Question

Quizplus · Accepted Answer

In periods of generally rising prices, nominal GDP will increase due to higher prices. However, real GDP, which is adjusted for inflation, will not increase as much because the increase in prices means that each unit of output is producing less real value. Therefore, real GDP will grow slower than nominal GDP.

In Periods of Generally Rising Prices