If both aggregate output and the aggregate price level increase:
A)real GDP will increase faster than nominal GDP.
B)nominal GDP will increase faster than real GDP.
C)it makes no difference to real or nominal GDP.
D)real GDP and nominal GDP will increase faster than the price level.

Question

Quizplus · Accepted Answer

When both aggregate output and the aggregate price level increase, nominal GDP will increase faster than real GDP. This is because nominal GDP includes the effect of price level changes, while real GDP measures output adjusted for price changes. Therefore, if both increase, nominal GDP will reflect both the increase in output and the increase in prices.

If Both Aggregate Output and the Aggregate Price Level Increase