If the nominal GDP rises by 3 percent and the price level rises by 5 percent,then the real GDP __________ by __________.

Name: If the nominal GDP rises by 3 percent and the price level rises by 5 percent,then the real GDP __________ by __________.
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Question

Quizplus · Accepted Answer

Real GDP is calculated by dividing nominal GDP by the price level (in terms of a price index), so if nominal GDP rises by 3% and the price level rises by 5%, the real GDP will decrease by 2% (3% - 5% = -2%).

If the Nominal GDP Rises by 3 Percent and the Price