Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the next five questions: Assume that the base year is 2012.

-Real GDP increases if:
A) current prices increase.
B) current quantities increase.
C) current prices are constant.
D) nominal GDP increases.
E) nominal GDP decreases.

Question

Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the next five questions: Assume that the base year is 2012.
 
-Real GDP increases if:
A) current prices increase. 
B) current quantities increase. 
C) current prices are constant. 
D) nominal GDP increases. 
E) nominal GDP decreases.

Quizplus · Accepted Answer

Real GDP is calculated by fixing the prices at a base year and then using the quantities produced in different years. Therefore, if the quantities produced increase, the real GDP will also increase, given that the base year prices are held constant.

Note: A, C, D, and E are incorrect because they do not take quantity changes into account.

Consider the Following Data That Gives the Quantity Produced and Unit