If the nominal GDP rises by 3 percent and the price level rises by 5 percent,then the real GDP __________ by __________.
A)rises;8 percent
B)falls;8 percent
C)rises;2 percent
D)falls;2 percent
E)none of the above

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