If nominal GDP increased by 11 per cent while real GDP increased by only 5 per cent, then:

Question

Quizplus · Accepted Answer

Nominal GDP measures the value of goods and services produced in an economy at current prices, while real GDP measures the same value but at constant prices. The difference between nominal GDP and real GDP is the result of price changes.

In this case, if nominal GDP increased by 11%, while real GDP increased by only 5%, it suggests that prices have increased. The difference between the two (11% - 5%) is around 6%, so the price level must have increased by around 6%. Therefore, the correct answer is A).

If Nominal GDP Increased by 11 Per Cent While Real