If real GDP grows by 3% and the GDP deflator grows by 2%,then nominal GDP must grow by 5%.

Name: If real GDP grows by 3% and the GDP deflator grows by 2%,then nominal GDP must grow by 5%.
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Question

Quizplus · Accepted Answer

Nominal GDP is calculated by multiplying real GDP by the GDP deflator. Therefore, if real GDP grows by 3% and the GDP deflator grows by 2%, then the product of those two growth rates would be 5%, indicating that nominal GDP has grown by 5%.

If Real GDP Grows by 3% and the GDP Deflator