Why has nominal GDP historically increased more rapidly than real GDP in Canada?
A)because of high interest rates
B)because of deflation
C)because of inflation
D)because of statistical discrepancies

Question

Quizplus · Accepted Answer

Nominal GDP is calculated using current market prices while real GDP is adjusted for inflation using the base year prices. Therefore, if there is inflation (i.e. a general increase in the level of prices of goods and services over time), nominal GDP will increase at a faster rate than real GDP. This has been the case historically in Canada, where inflation has been present.

Why Has Nominal GDP Historically Increased More Rapidly Than Real