A country reported a nominal GDP of $100 billion in 2015 and $75 billion in 2014 and reported a GDP deflator of 125 in 2015 and 120 in 2014.What happened to real output and prices from 2014 to 2015?
A) Real output and prices both rose.
B) Real output rose and prices fell.
C) Real output fell and prices rose.
D) Real output and prices both fell.

Question

Quizplus · Accepted Answer

Real output rose because the nominal GDP increased from $75 billion to $100 billion, and prices also rose as indicated by the increase in the GDP deflator from 120 to 125.

A Country Reported a Nominal GDP of $100 Billion in 2015