If GDP increases from $10 trillion to $12 trillion in a year, it can only mean that aggregate output grew by 20%.

Question

Quizplus · Accepted Answer

The statement is not necessarily true. GDP can increase due to factors other than an increase in aggregate output, such as an increase in prices or an increase in government spending. Therefore, we cannot assume that a GDP increase of $2 trillion means a 20% increase in aggregate output.

If GDP Increases from $10 Trillion to $12 Trillion in a Year