In the short run, when will real and nominal GDP both decrease?

Question

Quizplus · Accepted Answer

In the short run, a decrease in aggregate demand will lead to a decrease in both real GDP (output) and nominal GDP (output value), as prices and production adjust downwards. A decrease in aggregate supply can lead to higher prices and potentially lower output, but the impact on nominal GDP is not as straightforward because the price level could increase even if output decreases, thus nominal GDP might not decrease.

In the Short Run, When Will Real and Nominal GDP