In periods when prices are falling,on average,
A)real GDP will grow slower than nominal GDP.
B)real GDP will grow faster than nominal GDP.
C)real GDP will grow as fast as nominal GDP.
D)one cannot calculate real GDP.

Question

Quizplus · Accepted Answer

When prices are falling, the value of goods and services measured in constant prices (real GDP) will tend to increase faster than the value measured in current prices (nominal GDP), because the deflationary effect is removed in the calculation of real GDP.

In Periods When Prices Are Falling,on Average