Statement I: When there is inflation,real GDP will be greater than GDP.
Statement II: The greater depreciation is,the greater the difference between GDP and NDP.

Question

Quizplus · Accepted Answer

Statement I is false because inflation affects nominal GDP and not real GDP; real GDP is adjusted for inflation, so it reflects the volume of production, not the changes in price levels. Statement II is true because NDP (Net Domestic Product) is calculated by subtracting depreciation from GDP, so a higher depreciation would indeed increase the difference between GDP and NDP.

Statement I: When There Is Inflation,real GDP Will Be Greater