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

Question

Quizplus · Accepted Answer

Nominal GDP is the value of all goods and services produced in an economy, measured at current market prices. Real GDP is the value of all goods and services produced in an economy, adjusted for inflation. Since nominal GDP increased by 11 per cent and real GDP increased by only 5 per cent, we can infer that prices also increased by around 6 per cent (11 per cent - 5 per cent = 6 per cent). Therefore, option C is the correct answer. Option A is incorrect because if real output had fallen by around 6 per cent, then real GDP would have decreased, not increased by 5 per cent. Option B is incorrect because a 16 per cent increase in prices is too high for a year. Option D is irrelevant to the given information.

If Nominal GDP Increased by 11 Per Cent While Real