If the GDP grows 8% in one year and inflation as measured by the GDP deflator grows by 6% over the same time period,then the real GDP has increased.

Question

Quizplus · Accepted Answer

Real GDP is calculated by adjusting nominal GDP (which includes inflation) by the corresponding inflation rate. Therefore, if the GDP grows 8% while inflation grows by 6%, the real GDP has still increased, albeit by a smaller margin of 2%.

If the GDP Grows 8% in One Year and Inflation